Payment Protection Insurance (PPI)

Top 5 tips

  1. If you are considering purchasing PPI, make sure it is appropriate for your circumstances, and is the best option for you.
  2. Make sure all the costs, conditions and exclusions attached to the PPI policy have been clearly explained to you.
  3. Do not feel pressured into buying PPI from the provider of your loan or credit – shop around until you obtain a deal which meets your needs.
  4. Enquire on the period available to you for cancelling your PPI. No charge should be applied for cancelling a policy, or making a claim for a mis-sold PPI.
  5. If you think you have been mis-sold PPI, make a claim using the standard template provided.

What is PPI?

Payment Protection Insurance, otherwise known as PPI, is an insurance policy that is available to protect you on loan or debt repayment, in the event that you are unable to meet the regular repayments, perhaps due to illness, an accident, or unemployment.

PPI is often sold as part of the loan package when taking out a personal loan, mortgage, credit card or store card. It can also be bought as a separate product.

Do I need PPI?

The UK Money Advice Service’s website provides some very useful information about PPI, including what it does and does not cover, its pros and cons, the costs involved, as well as other types of insurance to consider. A link to this can be found below:

Money Advice Service - Do you need PPI?

However, please note that this information is aimed at consumers based in the UK, and is not Guernsey-specific.

If you are considering buying PPI, you should ensure that you have been provided with a clear explanation of all the costs, conditions and exclusions involved. Remember, you are not obliged to buy PPI from the provider of the loan, mortgage or credit, and can shop around until you find something appropriate for you. Some loan or credit providers may insist that you take out PPI with them, but ultimately it is your choice whether you go to another lender or credit provider.

As PPI is not a cheap option, it is also advisable to ask for quotes for both a loan with PPI and one without. If this cannot be provided, again, you may want to consider other providers.

Was I mis-sold PPI?

PPI has received adverse publicity in the media over last few years, due to the number of claims that were rejected after policies were purchased.

Consumers had bought such policies believing they would cover their loan or debt repayment during periods of hardship, but thousands later found, when they came to claim on their policies, that they did not qualify to claim for PPI. For example, they may not have been in full-time employment, or they were below the minimum age.

On review, these policies were found to have been ‘mis-sold’, due to the inadequate explanation of the exclusions on such policies at the point of sale.

As a result, the banks, and other financial institutions in the UK who were involved in the direct sales process of PPI were required to provide redress to their customers. Unfortunately, as the redress exercise was put in place by the UK regulator, it did not extend to banks, loan or credit providers in the Bailiwick of Guernsey, which sold PPI underwritten by UK insurers. That said, although ther was no specific requirement for Guernsey banks to follow suit, some UK banks with a presence in Guernsey extended their PPI redress policy to the Channel Islands too.

The UK regulator set a deadline of 29 August 2019 for PPI complaints. Generally, if you did not make a complaint to your provider on or before 29 August 2019 you can no longer submit a claim. 

That said, you may be able to complain to your bank or other provider, or to the Channel Islands Financial Ombudsman (if the PPI was sold by a provider either in the Bailiwick of Guernsey or Jersey) or the Financial Ombudsman Service (if it was sold by a UK provider), after the deadline, if you experienced ‘exceptional circumstances’ which meant you could not complain within the time limit. Some examples of situations that may be considered exceptional have been provided by the Financial Ombudsman Service, a link to which can be found here, under the heading, “What counts as exceptional circumstances”.  

Further information

Money Advice Service - How to Claim for Mis-sold PPI

Money Advice Service - Letter Templates

However, please note that this information is aimed at consumers based in the UK, and is not Guernsey-specific.