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Fair refunds to be made by PPI providers
Added: (Wed Apr 11 2007)
London (finance-hub) 10 Apr 2007: In the battle against Payment Protection Insurance companies, consumers have enjoyed a victory. The PPI companies have recently agreed to make sure that a fair refund is being made to consumers who cancel policies. In this connection it may be mentioned that consumers generally opt for PPI when they take out secured loan in UK.
Earlier many PPI contracts used to include a nil-refund policy. But recently the whole issue of the fairness and effectiveness of PPI came under question. In response to this, PPI companies have now decided that they will offer a fair refund to those policyholders who decide to cancel their policies.
It has been agreed between the Financial Services Authority and the PPI company trade unions as part of the deal that payment protection insurance providers will no longer be applying nil-refund clauses to PPI contracts. PPI is usually recommended to borrowers when taking out credits, mostly secured loans.
One FSA spokesperson stated that it would be up to the insurer to show that the refund they offer was reasonable and fair. He further added that it might not necessarily mean that consumers got a pro-rata refund because there might be increased risk at the start of a finance agreement and there would be set-up costs to the insurance. He opined that there would be a significant consumer benefit arising from that change.
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