Leading law firm Stephensons Solicitors LLP has welcomed the news that Lloyds Banking Group has stopped selling Payment Protection Insurance (PPI) policies with its loans.
The law firm, which represents people who have been miss-sold these types of policies by challenging the legitimacy of them, says it is a welcome move forward by Lloyds, and hopes other banks will now follow suit.
PPI policies have received extensive criticism over the past few years, and numerous banks have come under fire for policies being miss-sold. In the past year, 30% of all new complaints made to the Financial Ombudsman (FOS), were in relation to PPI policies.
Lloyds will no longer sell PPI alongside its personal loans, credit cards and mortgages to any new customers of Lloyds TSB, Halifax, Bank of Scotland, Cheltenham & Gloucester and Black Horse.
Liam Waine, a partner at Stephensons, said: “PPI is supposed to help people pay their loan if they lose their job, or fall ill. They are therefore a good idea in theory and beneficial for a lot of people.
“However, often when policies are sold in tandem with a loan, they are not only far more expensive than similar products on the market, but their cost is added to the loan, meaning borrowers are paying interest on the policy as well as the amount they borrowed. We have proven in many cases that this is unfair.
“Today’s news that Lloyds is to stop selling the policies with its loans can only be positive news for borrowers.
Stephensons’ Consumer law team advises people on a daily basis who have perhaps lost their jobs and can no longer keep up with their loan repayments. They paid the premium to have a PPI policy to protect them in these situations, but often in reality they find it doesn’t.
Liam adds: “The most common example is where a person is sold a policy when they are self employed, which normally excludes them from exercising it if they lose their income. In these cases we have been able to challenge the fairness of the policy, and many people have managed to recover the amount of the PPI and have it knocked off the remaining balance of their loan.”
There have also been cases where people have been told the PPI policy is compulsory, and that they cannot have the loan without it. If the loan was agreed before the law changed on April 6th 2007, they may be able to claim that the entire agreement is unenforceable. However, this is a very complex area of law, and specialist advice should be sought.
Anyone who has been in a similar situation should speak to their local Citizens Advice Bureau or call Stephensons, who offer a free initial assessment of the agreement to see whether or not it can be challenged.
If it can be challenged, Legal Aid may be available subject to financial eligibility.
For more information, contact our dedicated team on team on 0800 694 0189.
