There’s been no shortage of press surrounding PPI claims recently, but many still don’t really understand whether or not they might be eligible to make a claim – or whether they even have PPI!

PPI is Payment Protection Insurance and is generally sold alongside loans, store cards, credit cards and similar products. The idea of PPI is that if, for some reason, you suddenly cannot make a payment on your loan or product, that you are covered. This might be in a situation where you are made redundant, for example or are unable to work because you are sick or have had an accident. This is not a bad thing, particularly in the current climate where job security is at an all time low and unemployment continues to rise. So just why are people making PPI claims?

The problem is not necessarily in the Payment Protection Insurance itself but in the way that it has been sold. For example, most policies will not cover you if you are unemployed, retired or self-employed at the time you take out your loan or card. Yet people who fall into these categories have been sold these loans despite the fact that they will never be able to claim on the policies. In other situations, people have been sold the PPI without even realising it or without being made completely aware that it is optional. And this is big business for the banks and credit brokers selling it. There are 20 million PPI policies in the UK, worth an estimated £5 billion annually to the industry.

The industry is in a spot of trouble, to say the least. The FSA has been issuing fines to companies who have sold the insurance incorrectly. The Financial Ombudsman has also complained to the FSA that it believes some lenders are deliberately declining all attempts by individuals to reclaim. Of the PPI claims that were referred to the Ombudsman in the 12 months to April 2009, 89% went in favour of the consumer. In fact, in September 2009, Lynne Thorius enjoyed a landmark legal victory against lender MBNA. Not only was she able to make a PPI claim, she also had her entire £8000 credit card debt wiped out as a result of being wrongly sold the policy.

There are numerous situations that may be classified as ‘mis-selling’ and if you believe that you might be eligible to make a PPI claim, you should seek expert advice.