2 February 2007
Consumers who were sold payment protection insurance (PPI) policies without being made aware that it was an optional extra may demand a refund for the premium, according to one financial expert.
A spokesman for the Finance and Leasing Association (FLA) said that it was likely for debtors who took out a PPI would apply to get their money back following the high-profile fine issued to GE Capital Bank after it was found to be mis-selling the products.
"It seems likely that customers will apply for and take these refunds," said the spokesman, admitting that the cost to the bank would not be enormous since figures put out by GE Capital showed that the average cover premium for store card customers was £9 per year.
One of the major issues surrounding the debate is the fact that those who sell the premiums are usually just sales assistants with no financial background. This leads to the items being sold as part of the loans package, confusing the customer into thinking it is essential.
Director of Financial Services at the price comparison and switching website uSwitch.com, Nick White, commented: "One of the major problems uSwitch.com sees with PPI being sold with store cards is that it is the perfect opportunity for providers to trick customers into taking out a policy by bundling two separate products together.
"Ideally, we would like to see all PPI policies sold as a separate product to ensure people are not lured into signing up to it just because they do not 'opt out' or understand exactly what they are signing up to."
Mr White also called for a summary box, similar to the ones applied to some credit cards, to be implemented to so that consumers can clearly see the actual cost of the cover, the level of protection they will receive and fully assess and understand whether the premium is suitable for their needs.