Payment Protection Insurance
Payment Protection Insurance is meant to help repay your debts if your earnings fall - through accident, unemployment or illness. Consumers are typically sold PPI when taking out a mortgage, loan or credit card.
Mis-selling of PPI happens where consumers are sold a policy which:
Irish consumers who feel they were mis-sold PPI can turn to the Financial Services Ombudsman who has the power to make financial institutions explain their conduct and compensate consumers. Unfortunately, Bill Tyson has found that getting the Ombudsman to take the case on is not always straightforward.
Michelle O'Keeffe bought PPI in 2004, believing that it would pay out ¤500 a month if she ever needed it. Michelle had major spinal surgery and was relieved to know she had the policy in place to cover her financial expenses. However, when she went to make her claim, she discovered she was not covered and believes that she was mis-sold her policy.. Michelle tried to get to the bottom of this with her bank but by the time she went to lodge a complaint with the Ombusdman's Office, she was told they could not investigate because the complaint was older than 6 years.
The 6-year rule means that a consumer is not entitled to make a complaint if the conduct complained of occurred more than 6 years before the complaint is made.
Regarding PPI the Irish Ombudsman's office points out that the 'conduct complained of' is the act of alleged the mis-selling at the point of sale.
This excludes anyone who took out PPI before 2006, on a mortgage, credit card or bank loan for example.
For those living in the UK, this does not apply - they have a 12 year rule, and during the biggest mis-selling scandal of recent times UK banks were forced to pay billions to consumers who were mis-sold policies. In the year to March 31 2012 the UK Ombudsman found in favour of the consumer in 82% of PPI cases. In its latest reported year - for the whole of 2011 - the Irish Ombudsman found in favour of the consumer in just 33% of PPI mis-selling complaints.
The Consumer Show has learned that Bank of Ireland has reissued more than 1500 refunds to those consumers who self-selected PPI on credit card loans.
In our first episode of the new series, Bill Tyson reported on the mis-selling of Payment Protection Insurance. Last week, AIB announced that it would be refunding over ¤3million to customers with payment protection insurance on account of processing mistakes. Financial journalist Jill Kerby joined Eddie & Keelin on the show to explain how people can find out if they might have been mis-sold PPI. And don't forget that if you'd like to write to your lender to enquire about a payment protection policy you may own, Eddie has devised a ready-made letter which can be sent to any creditor. Click here to download Eddie's letter...
Statement from Central Bank:
The Central Bank of Ireland is aware of and has been in ongoing contact with AIB regarding an error relating to eligibility and validation checks conducted on applications when customers opted for optional insurance products on credit cards such as Payment Protection Insurance, Travel Insurance and Card Protection. This current error has resulted in ¤3.1 million to be refunded by AIB to c. 11,500 customers and we are aware that AIB will be issuing letters to impacted customers over the coming week. Customers who have any queries on this issue should contact AIB's Customer Service Team on 0818 300 073.
During 2011, the Central Bank carried out a review of the suitability of sales of payment protection insurance by firms to customers who took out loans to determine if these sales were in compliance with our Consumer Protection Code requirements. We are now nearing completion of more detailed assessments as the initial review has raised a number of concerns. We will be reverting to the firms involved directly in the near future. A summary of the main findings will also be published when our work is completed. Part of this current issue with AIB is encompassed in the Central Bank's wider PPI review.
Eddie's Letter - Get the Information You Need
Eddie Hobbs has created the following letter which consumers may use to send to their creditors,
Click here to download Eddie's letter...
Payment protection insurance (PPI) is an insurance policy designed to cover your loan repayments if, for example, you get sick or lose a job. In the last number of years, the mis-selling of PPI has become a huge scandal in the UK where consumers were sold the product without their knowledge or with conditions which meant they would never be in a position to make a successful claim. The Consumer Show's Reporter Bill Tyson set out to investigate if similar cases of mis-selling may have occurred here in Ireland.
In 2002 Kildare self-employed singer Danny McCarthy took out a PPI policy with Bank of Ireland. On two occasions Danny attempted to make a claim on his PPI policy. The first time, Danny was told he could not claim as while his hours had reduced, he was still earning some income. The second time, when Danny was diagnosed with cancer, his claim was rejected as the policy excluded anyone who worked for less than 18 hours per week, just prior to becoming ill.
Danny believes he has paid between ¤5,000 and ¤7,000 in premiums and feels he should be refunded, but Bank of Ireland have only offered him a partial refund at this point.
Bill also met with Tim Mohan from Monaghan - Tim is seeking a refund for premiums on three policies which Tim says he doesn't remember buying.
In the UK, the financial ombudsman has upheld consumer complaints in this area, and the banks have been obliged to reimburse customers accordingly. Caroline Gill, former Insurance Ombudsman for Ireland, explains how she saw thousands of consumer complaints against the banks upheld. A review by The Central Bank of Ireland is currently looking at the suitability of sales of PPI by seven lenders, the findings of which are not expected until the end of June.
Have you been mis-sold PPI?
If you think you may have been mis-sold a payment protection insurance policy, The Consumer Show advises that you take the following steps:
Please do get in contact with us (email@example.com / 01 208 4636) if you have been affected by the mis-selling of payment protection insurance - it is a subject we will definitely be revisiting and we want to hear your stories.
We put the following questions to seven lenders:
1. How many PPI policies have been sold?
2. What is your claims ratio on PPI?
3. How many complaints have you had about the mis-selling of PPI?
4. How many of these complaints have you settled?
We received the following responses in the statements below:
Statements from Financial Institutions Re. PPI
STATEMENT FROM AIB
In recent years, we have observed a significant increase in the overall level of claims on PPI policies. This increase peaked in 2009. While claims in relation to the policy elements of accident/sickness, loss of life and critical illness have remained relatively constant, the increase has been particularly acute in the area of involuntary unemployment/business failure. ??In the period 2008-2011, approximately 1 in every 5 AIB policy holders claimed on their PPI policy. Approximately, 4 out of every 5 claims are successful. ??It is inevitable that some complaints will arise - all complaints are handled in accordance with the Consumer Protection Code requirements, investigated thoroughly and settlements are made where appropriate. Less than 0.5% of our overall PPI customer base made a complaint to AIB in 2011. This figure includes all types of complaints including claims related and administrative/operational type issues. ??Just an additional note for your own information - it has been reported that Payment Protection Insurance does not cover those who are self employed or those employed on contract. AIB does offer cover to these customer types, specific details outlined below:
Note : AIB Mortgage PPI covers Involuntary unemployment, accident /sickness and critical illness but NOT loss of life. (Separate life cover is required for mortgage customers)
STATEMENT FROM BANK OF IRELAND
Mortgage Repayment Product
At the time the Mortgage product offered Accident, Sickness/|Disability, Life and Unemployment benefits to privately employed and Accident, Sickness/|Disability, Life and Hospitalisation benefits for Self Employed/State Employed customers. The reason for the distinction was that BOI believed that Self Employed/State Employed could not benefit from Redundancy cover and therefore provided the other option in its place
In order for the customer to have a valid claim, he would need to have the self employed section of his claim form fully completed by his accountant or his tax office so that they can verify his self employment and confirm that he was working for at least 18 hours a week at the time he became ill and also confirm that part of his job was to travel around to different gigs and also rehearsal time in preparation of his gigs. Therefore where either his accountant or Tax Office verify that rehearsal and travelling are part of his job then they would be included as such.
For the mortgage cover the claim for cancer is under the sickness/disability benefit. To claim for disability a customer needs to be working for more than 18 hours a week in ROI. The insurance is to replace lost income as a result of being unable to work.
BOI keeps policy documents for as long as the policy is in place.
It is our practice at all times, to highlight to customers that if they are not satisfied with our response/decision that they have the option to refer the matter to the Financial Services Ombudsman.
All customers are entitled to cover as long as the meet the eligibility criteria of being:
On the annual anniversary of the MRC policy customers receive a policy schedule reiterating the benefits and the key exclusions of the policy. In addition, customers are requested to notify us of any material change in their circumstances that could impact the policy.
In addition, many self employed customers make successful claims on the policy for both involuntary unemployment and disability. Therefore it is inaccurate to state that this product is not suitable for the self-employed.
30 BOI PPI complaints were referred to the Ombudsman in 2011 and they adjudicated in 25 and none were upheld.
STATEMENT FROM ULSTER BANK
Any complaints Ulster Bank receives in relation to PPI or indeed any product are managed in accordance with the requirements of the Consumer Protection Code and are fully investigated to ensure an appropriate redress is delivered to our customers. The findings of each investigation are shared with the customer and remain confidential between the customer and Ulster Bank. Ulster Bank is committed to making the complaints process as simple and fair as possible and all complaints are treated on a case by case basis.
STATEMENT FROM MBNA
We do not comment on specific cases. This [i.e.responses to questions raised about PPI policies sold by MBNA generally] is commercially sensitive information.
STATEMENT FROM NIB
There were 4 queries in the last week on the back of recent coverage. These were queries rather than complaints. There were less than 10 queries since 2009 and there were no complaints to the ombudsman.
In a recent survey by Amárach, 75% of Irish shoppers want to buy Irish products in their weekly shop - mostly because they want to support Irish jobs. The Cusack family from Cork are no different, and thought their shopping bill was generally made up of 50% Irish goods. However, when Eddie crunched the numbers for them, they were shocked to discover they were only managing 23% of Irish products. Armed with the Buying Irish Guide, the Cusack family took on Eddie's challenge of dramatically increasing their Irish purchases.
Liam and Eyvonne, with their three children Adam, Lorchan and Lucy, spent a grueling 3 hours at their next weekly shop, examining labels in detail and trawling the shelves for Irish signposts. The family worked hard to try and increase their "Irish" spend, and were delighted to discover that they had achieved a spend of 82% of their total shopping on Irish products.
If you're interested in trying to buy more Irish products like the Cusacks, we'd like to hear from you with any problems you may encounter or top tips you can share. And don't forget to check out the information on our website - we'll be adding information to this guide as the series progresses, all in a bid to make it a bit easier for consumers to figure out what is Irish and what's not.
Young mother Susan Bracken contacted The Consumer Show about a problem she was experiencing with Aer Lingus. Susan's problems started last September when she was flying from London to Dublin with her 4 month old son Linus on the late evening flight. Check in staff told her that despite having a booking reference she was not actually booked onto the flight. They said that this was due to a technical problem that they had seen before with infant bookings.
Aer Lingus insisted that Susan book new seats at the check in desk costing £260 (sterling) but assured her that Aer Lingus customer care in Dublin would reimburse her the difference once she explained the issue.
But since then Susan tried to no avail to get Aer Lingus to address her issues. She spent seven months sending faxes and receiving replies in the post as she was told that Aer Lingus don't deal with complaints over the phone.
That's when she decided to get in touch with us...
The Consumer Show contacted Aer Lingus who apologised to Susan and refunded her immediately for her additional expenses. They said that they are 'extremely keen to find the source of the problem and to ensure that it does not happen again'.
If you'd like to tell us about your experiences - good or bad - in relation to value, service or product performance. Please get in touch by ringing 01 208 4636 or email us on firstname.lastname@example.org
STATEMENT FROM AER LINGUS
As you've correctly pointed out the specific customer complaint from Ms Bracken has been resolved. The situation which led to Ms Bracken's booking not being recorded in our booking system is being investigated. At this point it would appear that Ms Bracken's credit card details were not accepted by our booking system and that a message was displayed on screen at the end of the booking flow alerting her to this fact and asking her to contact our Customer Contact Centre to clarify the matter. As the Customer Contact Centre did not receive a call the booking was not completed and this is how the unhappy situation occurred when Ms Bracken presented for check-in. As we are satisfied that Ms Bracken's card was not in any way invalid we were happy to reimburse Ms Bracken for any additional expense incurred. We have yet to ascertain why the original booking did not complete but we are extremely keen to find the source of the problem to ensure it does not happen again. We have apologised to Ms Bracken for this unsatisfactory situation and hope that she will be happy to book with us again.
We welcome your intervention on behalf of consumers. As an organisation that lives from the satisfaction of its customers we are happy to take on board the feedback you've provided and will use it to make further improvements to the service.