22 February 2016
David is a young professional who, at the time of taking out the loan, was fresh out of university and in to his first job.
Life was good and David was a hard worker, dedicated to his career and getting on in his profession. As part of his work, he needed to travel extensively. He sometimes took the train but when this wasn't possible he took his car.
His car, however, was an older model and had, on occasions, broken down. David was finding it increasingly stressful and so decided to borrow money to buy a new car. After researching options online, he found a financial company who offered finance specifically for buying a new car.
The deal looked good and although David would be stretching his finances, he knew that he would be saving money on fuel, servicing, MOTs, breakdown costs and so on.
The deal was completed over the phone and David was told by the finance company representative that he needed to take our payment protection insurance (PPI) as a way of protecting his loan. David doesn't recall being asked for his agreement but rather that it was part of the loan agreement.
He was sent the details in the post and he signed for the loan. He doesn't recall signing a separate PPI policy agreement.
Like many other cases that we come across, David felt he memory of how he was sold PPI was confused. He was unsure if he had a claim, as he had agreed to the policy but we explained that there were some issues relating to how the policy was sold to him that constituted mis-selling:
Although the lender was concerned about David taking his borrowing to the maximum, they cannot insist that he bought their own version of PPI. Like many other customers, David had other insurances that covered loss of income.
Having said that, if the bank were satisfied that David could repay the loan there should have been no need for a safety net.
In terms of car finance, if David failed to make repayments, the finance company could have removed the car.
The PPI policy that was sold to David was expensive. It added a significant amount to the loan, making the loan more difficult for David to afford. If PPI had not been added, David would have been able to afford the repayments much easier.