Credit Compensation

In the UK the financial ombudsman deals with complaints about fiscal matters. It seems that one of the biggest topics of complaint has been about controversial loan insurance sometimes called PPI.

There’s now a whole industry springing up for credit compensation and credit repair solutions because there are so many complaints.

Something like 25000 consumer complaints have been registered, all relating to the possible mis-selling of PPI, or payment protection insurance. And with a possible credit claim against institutions they’re being scrutinised carefully.

Indeed a number of institutions have been fined for such mis-selling. The idea behind PPI is simple. It works to cover repayments on loans or credit cards if you can’t pay, either through illness, or unemployment, or a number of other causes.

To a prudent borrower that sounds very sensible. But in many cases lenders have been accused of mis-selling the protection. The Competition Commission discovered that in 2006 something like 1.4 billion pounds out of 3.5 billion pounds of insurance was actually “excess profit” for the institutions that sold them. That’s a lot of excess!

The FSA has said that they believe that financial services companies have been too slow to stop mis-selling PPI. With 1.4 billion pounds in “excess” profits it’s very tempting to speculate as to why.

One thing is certain, the number of people complaining is likely to grow as more people discuss the situation. And the first successful claims made will inevitably fuel the growth of more claims from other people who might have been affected.

How you can save money on your insurance

Never, never just accept a renewal quote from your current provider on your Home and Car insurance cover. After mortgages, this is the best area to limit your spending by seeking alternative insurers. According to the RAC, On average you will save £214 by shopping around, while home and contents insurance tumbles from £320 to£200. Why not get some quotes from the internet, and if you don’t spend at least one lunch hour a year finding a better deal then I wish I had as much money as you!.

1. Reclaim PPI
Too expensive and agressively sold, payment protection insurance is one of the most profitable types of insurance created by the finance industry. It can add £3,000 to the cost of a £7,500 personal loan. Many people who were sold ppi could’t claim on it against it and they can now demand their premiums back.

Many companies will attempt to claim the money back, but you will pay a 25% premium on the monies awarded. Instead, use the Fiancial Ombudsman Service which is free and on average they are helping 80% of those missold . Helpfully, it offers a factsheet on how to make a complaint about PPI which you can find at financialombudsman.org.uk

2. Cancel your mobile phone insurance
Many people are strongly pressured in phone shops into spending between £50 and £90 a year on this cover. Most policies don’t cover you for the most dangerous type of risk airtime abuse (if your phone is ued to call overseas, and if your phone is lost your home and contents should coiver it.

Just ring your bank, stop the direct debit and job done!.

3. Rethink your life insurance
You can also cancel your life insurance. Just because the life insurance was sold to you by your mortgage broker you don’t need to to stick with that provider for the life of the remortgage. You can cancel it at any time to get a cheaper quote. With the human lifetime improving (ie. fewer people dying), life insurance companies have been cutting rates for years.

If you are in a job at a big employer, it is likely to offer “death in service” benefit worth at least three times your yearly salary, and often much more. Do you really need all that life cover on top as well?

4. Don’t pay for travel insurance you don’t need
Step 1 Obtain a European Health Insurance Card (EHIC) from ehic.org.uk or at your local Post Office. This has replaced the old E111 forms and gives you reducedcost or free medical treatment in EU countries and Iceland, Liechtenstein, Norway and Switzerland. You may even obtain treatment faster, as you won’t have to rely on a hospital waiting to receive authorisation to treat you from an insurer.

Step 2 Check your home insurance policy. cover is often provided when outside your home.

Step 3 Check your health cover policy, if you have one. These usually cover the costs of treatment incurred abroad. For most holidaymakers, who travel to southern Europe once a year, the only real benefit that travel insurance brings is cancellation cover. Ask yourself if that is really worth premiums that are often pounds 100 or more for a family.

For those who travel outside the EU, travel insurance is a must, though. If you go away more than once a year it is best to take a annual policy make sure you are only paying for what you actually need. For example, if you don’t ski or snowboard, you don’t need cover for winter sports.