The investigation conducted by the Central Bank into misselling of payment protection insurance is nearing its end. The Central Bank had required all lenders to be present in a meeting and it is rumored that banks and financial institutions have been found guilty of selling PPI inappropriately. The Central Bank spokeswoman confirmed that the investigation shall end soon and that the relevant findings shall be made public. This is an important development considering the fact that customers will become eligible for refund running into millions of euros if it is proved that banks were indeed guilty of misselling.
Payment protection insurance is a useful option for lenders and borrowers who want to minimize the risk involved in the loan. If the borrower is unable to repay the money for specific reasons, then he or she can make use of the policy to take care of repayment. The policy covers default of loan for specific instances like loss of job or illnesses.
While PPI is a valuable proposition in theory, the ground situation is different. Lenders have missold PPI policies and borrowers who were ineligible for the same were forced to purchase it. They were informed that their loan application could not be processed further unless they purchased the policy.
In some cases, the borrowers were charged for the policy without their explicit consent. In some other cases, those who did not need it were offered inadequate coverage at a very high cost. The low value deals have frustrated borrowers. This is why people are claiming PPI back stating that lenders missold these policies.
Misselling payment protection insurance policies was a risky decision on the part of financial institutions. They were aware that they could be asked to pay compensation if it was established that the policy had been missold. Yet, the lenders went ahead with the risky decision simply because of the huge profits involved.
Number of claims filed in this segment was very low. This represented a fantastic opportunity for lenders to earn more profits. This is why PPI misselling practices became very common. Banks had to offer loans at competitive rates to retain customers. They were involved in a race to the bottom with other lending and financial institutions To continue earning profits, they started selling high profit margin payment protection insurance. They focused more on earning profits through these policies.
This is why misselling of PPI has become so common in the lending industry. Contact Now Scottish Claims for more info about PPI.