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Scotland Wide PPI Specialists

Can a Bank Insist You Have a PPI Type Policy on a Loan?

30 January 2017

Since the scandal surrounding the mis-selling of payment protection insurance (PPI) broke, there have been many changes to protect the consumer. These changes are also to prevent the mis-selling of financial products in the future.

Some people are surprised to find that on applying to borrow money for a bank or lender, that they are told they have to have a PPI or income protection type policy. Can banks do this?

Yes, But There are Caveats…

Banks and lenders have always been able to insist that you take out certain types of insurance policies as part of the application process for loans, mortgages etc.

Normally, this has depended on the size and nature of the loan. The more money you borrow, the more likely it is that you will ask to protect the loan in the case of you being unable to make repayments etc.

However, unlike the mis-selling of PPI, there are some important things you need to be aware of;

  • Shop around for the best deal - You can shop around and use the various comparison sites to get the best deal for you, just as you would for any other insurance. You may, for example, find that the bank insists that you take out an income protection policy that includes redundancy cover. If this case, the policy could be expensive and thus, you need to compare all the policies and prices on offer.
  • The bank's own product - The bank can sell you their own brand of income protection or insurance policy but they must be a clear 7 days between the date the loan is sold to you and the date they can offer you their PPI policy.
  • Advised sales - If they tell you that their PPI policy is the right one for you, they must tell you the reasons why in a letter, outlining why it is the best policy for you.

And so, if the bank insist you have insurance on a loan, they can do so BUT the ball is in your court - you shop around for the right policy at the right price for you.

Can I Claim PPI Compensation?

Yes, you can if you have reason to believe you mis-sold the policy in the first place.

There are many reasons why PPI was mis-sold to customers. Customer were not always asked if they wanted it; it was just added to their account, even though for many thousands of customers it was not a suitable product.

Can Scottish PPI Claims Help You?

We can help anyone with PPI on their account to claim the compensation they are entitled to. Contact Scottish PPI Claims to find out more today!