Payment Protection Insurance, or ‘PPI’, is insurance designed to cover credit payments in the event of accident, sickness or unemployment. For this reason, it is also sometimes referred to as ‘ASU cover’. PPI was sold by finance companies and banks alongside a number of financial products, including loans, mortgages, credit cards and finance agreements. In most cases, the PPI was unsuitable for that customer and would not have been purchased but for the various mis-selling practices adopted by banks and lenders. Some of the most common mis-selling practices included failing to explain whether the PPI was optional or implying it was compulsory and failing to discuss crucial elements of the policy, including the exclusions and limitations and the ‘cooling-off’ period.
Self-employment PPI was an especially bad deal for self-employed persons, since it frequently only provided cover for people in employment. This means that, whereas the employee of a business would be covered if made redundant, a self-employed plumber, for example, may not be covered if the work “dried up” or contracts were lost. Even where self-employed people were not explicitly excluded from the policy, there would often be significant restrictions and limitations on when they could claim. Additionally, two of the most common reasons for generating a ‘sickness’ claim were often excluded from PPI policies. These related to mental health problems and back problems. Therefore, a builder who had a slipped disc would not be permitted to claim. Similarly, those unable to work due to stress or depression would not benefit from the cover. Sometimes, particular roles, such as taxi drivers, were explicitly excluded from the policy.
Other exclusions relating to employment Often, even those in employment would find themselves not able to claim under their PPI policy due to the exclusions in the small-print. For example, policies usually excluded people working less than 16 hours a week, those on temporary contracts and, occasionally, agency workers. Further, employees who worked full-time, though for a number of different employers, may not have been covered. If you accept early retirement or voluntary redundancy you are unlikely to be allowed to claim plus some policies exclude claims if you are dismissed for misconduct. Senior citizens and students, who are not in employment, would also clearly be excluded from the advantages of a PPI policy.
Mis-selling Banks and lenders were obliged to assess if the PPI policy was suitable for your demands and wishes. If you were self-employed, you were usually not questioned on your employment status or you fell within one of several other exclusions, the plan wasn’t suitable for you and also it is likely that it was mis-sold.
Defence Your bank or lender is not likely to possess a defence in a claim for a PPI refund should you have been unemployed, self-employed, retired or a student at the time you purchased the protection. Although you won’t be eligible for reimbursement if the lender manages to establish that you would have bought the PPI “but for” the mis-selling, this is unlikely to apply to such customers, who would surely not have bought the policy had they been made aware that they could be ineligible to make a claim under it. If your employment status fell into one of these types of categories at the time you bought PPI, you may be entitled to a complete refund, plus interest.