Payment Protection Insurance: How was it a real bad deal for the self-employed?
Payment Protection Insurance, or ‘PPI’, is insurance intended to cover credit payments in the event of accident, sickness or unemployment. Because of this, it’s also sometimes referred to as ‘ASU cover’. PPI was sold by banks and lenders alongside a number of lending options, including loans, mortgages, credit cards and finance agreements. In most cases, the PPI was unsuitable for the customer and would not have been purchased were it not for the various mis-selling practices adopted by banks and lenders. Among the most common mis-selling practices included neglecting to explain whether the PPI was optional or implying it was compulsory and failing to discuss crucial elements of the plan, such as the exclusions and limitations or the ‘cooling-off’ period.
Self-employment PPI was an especially bad deal for self-employed persons, because it frequently only provided protection for people in employment. In other words, whereas the employee of a business will be covered if made redundant, a self-employed plumber, for example, may not be covered if ever the work “dried up” or contracts were lost. Even where self-employed individuals were not explicitly excluded from the policy, there would often be significant restrictions and limitations on whenever they could claim. Additionally, two of the most frequent reasons for making a ‘sickness’ claim were often excluded from PPI policies. These were associated with mental health issues and back problems. Therefore, a builder who had a slipped disc would not be permitted to claim. Similarly, those unable to work because of stress or depression would not be able to benefit from the cover. Sometimes, particular roles, such as taxi drivers, were explicitly excluded from the policy.
Other exclusions in relation to employment Often, even those in employment would find they are unable to claim under their PPI policy due to the exclusions in the small-print. For example, policies usually excluded people working fewer than 16 hours a week, those on short term contracts and, occasionally, agency workers. Further, employees who worked full-time, but for a number of different employers, might not have been covered. In the event you accept early retirement or voluntary redundancy you are unlikely to be eligible to claim and some policies exclude claims should you be dismissed for misconduct. Senior citizens and students, not being in employment, would also clearly be excluded from the advantages of a PPI policy.
Mis-selling Banks and lenders were obliged to assess if the PPI policy was appropriate for your demands and wishes. If you were self-employed, you were not questioned on your employment status or you fell within one of several other exclusions, the plan wasn’t suitable for you and it is probable that it was mis-sold.
Defence Your bank or lender is not likely to possess a defence in a claim for a PPI refund should you have been unemployed, self-employed, retired or a student when you bought the protection. Although you won’t be entitled to reimbursement if the lender is able to establish that you would have bought the PPI “but for” the mis-selling, this is unlikely to apply to such customers, who would surely not have bought the policy had they been made aware that they could be ineligible to claim under it. If your employment status fell into one of these categories during the time you purchased PPI, you may be entitled to a full refund, plus interest.
Thousands of people could make PPI claims for compensation for mis-sold plans. We can assist you to reclaim what’s rightfully yours. If you want to generate a RBS PPI claim contact us using our online form then one of our specialist advisors will get back to you.
