The FOS Handles Skyrocketing Number of Mis-Sold MPPI Cases

\"The only guarantee in life is change.\" Throughout our lives we experience a myriad of changes, to which we must learn to adjust. These changes can vary from minor to major, and can be related to various aspects of our lives. In the world of finance, change is a constant. For instance, the trend of UK insurances is always on-the-go.

Recently, the outlook for UK mortgage payment protection insurance (MPPI) has changed significantly. Typically, we conclude that falling in the red means that we should cut our losses. However, some insurers who were mis-sold PPI to Britons are also offering them \"gesture\" payments. What is problematic about these payments is that they are not a full refund. If an insurer offers you such \"refunds,\" buyer beware!

In fact, the Financial Ombudsman Service (FOS), a UK consumer watchdog has upheld 90% of the rejected PPI claims that victims of mis-selling have made. This figure is particularly amazing, considering that that figure had already hit a remarkable high level of 40%. The FOS is taking these actions to serve as advocates for those who have been cheated.

What is wrong with these policies that insurers are selling? Typically, the problematic PPI was pricey or unwanted. The function of PPI is to cover repayments for credit cards and personal loans if you cannot make them, due to:

• Suffering an accident

• Becoming ill

• Losing your job

While the problem is clear, the solution is foggier. The UK watchdog is experiencing resistance, as the banking industry is not correctly processing the complaints. To a certain degree, these \"goodwill\" payments by insurers function as \"hush money.\" Many of the victims of PPI mis-selling are pleased that they are receiving compensation, so they oftentimes cease trying to obtain a 100% refund. The mentality is, \"Half a loaf is better than none.\" However, truth be told, the \"goodwill\" payments are oftentimes only about a third of the amount they paid for the PPI!

Many insurers are insisting that they consider every complaint of mis-selling of PPI, on a case-by-case basis. They argue that they examine all of the evidence available, and that their customers are not obligated to take their settlement offers. Furthermore, they claim that anyone whose complaint the lender has rejected can refer their case to the FOS.

Nevertheless, the complaints continue. Furthermore, the UK has penalized several lenders for their mishandling of PPI sales. These include:

• Alliance & Leicester

• GE Capital Bank

• HFC Bank

• Liverpool Victoria Banking

In January 2009, the UK Competition Commission announced that beginning in 2010, the bundling of PPI with credit cards and loans will be illegal. Instead, lenders must wait a full seven days before they contact their customers, about taking out PPI.

While PPI should be a convenient tool for those who cannot temporarily make their repayments, it has become a nightmare for those who are the victims of mis-selling. If a lender sells you MPPI, verify that the price is reasonable-and that you are a willing customer!