Citizens Advice Scotland (CAS) have said today’s landmark High Court court decision against the British Bankers’ Association is a major victory for consumers and for fairness.
The banks were challenging a Financial Services Authority ruling that allowed people to make retrospective claims for mis-sold insurance when taking out a loan. People will now be able to make such claims.
CAS Chief Executive Lucy McTernan said,
“This ruling will help people who have been the victims of the mis-selling of Payment Protection Insurance (PPI), and we hope that it will spell the beginning of the end of this unfair practice.
“CAB advisers across Scotland regularly see cases of people who have been mis-sold insurance and are having to pay for services they feel they did not ask for and do not need. Those few extra pounds a week can make a big difference to a household budget – especially at the moment when times are so hard for so many families.
“Insurance sellers are complaining about this change, but the bottom line is that it will only affect those who have traded unfairly. If sellers don’t want to have to pay compensation, the answer is very simple: don’t mis-sell your services. This is a victory for consumers, and for fairness.”
CAS spokespersons are available for interview. Call Tony Hutson on 0131 550 1010.
Notes to editors - click to expand/collapse
Scottish CAB advisers helped clients with nearly 1,400 issues relating to Payment Protection Insurance (PPI) in 2009/10. Many of these issues concerned mis-selling of policies, which has been a high profile problem in the last few years. Evidence from Scottish bureaux suggests that clients are continuing to suffer detriment from mis-sold policies. Some recent examples of cases are given below:
• A client was told that she had to take out payment protection insurance on a loan despite being a long term Incapacity Benefit (IB) claimant. The client now wants to claim back over £900 in insurance payments.
• A client reports that she was mis-sold payment protection insurance by her bank. The client was unemployed at the time of taking the loan due to back problems, but was encouraged to take out insurance. The client subsequently attempted to make a claim on her insurance when her condition worsened, but the insurance company turned down her claim, stating that the client had been mis-sold the policy by her bank. The bank has refused to take any responsibility for the policy.
• A client took out a personal loan for £600 and was encouraged to take out insurance, despite the client informing them of a pre-existing condition. The client was made redundant in 2007 and was advised by the creditor to refinance the debt over a seven year period. The client now owes nearly £4,500 on the original loan of £600. The client has been diagnosed with cancer, but the creditor has advised him that he has no insurance cover for this as it was the result of his pre-existing condition.
• A married couple were offered a consolidation loan after advising their bank that they were experiencing difficulties repaying their overdraft. The clients had an overdraft of £3,546 which they felt unable to repay. At the time, both clients were under considerable stress and did not fully understand the nature of the agreement. The loan included payment protection insurance cover of £1,281 which was not required as neither of the clients are able to work, a fact the branch manager was aware of. The clients now have a debt of over £8,600, an increase of nearly £5,000 on the original debt.