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Archive for tag: PPI Jargon

PPI Jargon

Don't know your redress from your alternative redress? Don't be confused by PPI jargon! Use our handy guide to cut through it.

Jargon

Jargon

Explanation

PPI

Payment protection insurance is the name given to the product that has been mis-sold to thousands and thousands of people. It may not always be referred to as PPI on your account. For example, it could be called 'loan care' or 'card protection' etc.

Look for anything that promises to make repayments on the account if you are unable to as this is more than likely PPI.

 

Redress

This is another word for compensation and is the monies that you get back in compensation

 

Monies

A financial term for the settlement or the amount of compensation you receive

 

Single premium policy

Some PPI products were charged at a monthly price, whereas others were sold and the customer paid for it in one lump sum. These are no longer sold in the UK as the issue was that not only was the policy unsuitable for people in many cases, they were also not lasting the length of the loan and, when customers cancelled them, the bank did not reimburse them their money

 

Advised sale

This is where a customer, like you, may have been told - that is, advised - to take out the policy. However, you may not have told explicitly why the product was right for you. Today, when any financial product is sold to you on an advised basis, you must receive a letter that details all the reasons why it is the right policy for you.

 

Alternative redress

This is a common phrase and is used to describe a loophole within the law that some banks are exploiting. Instead of compensating customers the full amount, they are paying back the difference between the cost of their policy and the next cheapest.

*UPDATE banks and lenders are now compensating customers according to the guideline of putting people back to where they would have been financially had they not been sold PPI*

 

Term

This refers to how long your loan lasts for, such as 10 year term or 5 year term. In other words, if you borrow a £10,000 over a 10-year term, by the end of 10 years you will have paid it back.

 

It is important as it has been discovered that some PPI policies fell short of the term of the loan, hence in other words, the PPI stopped covering you in year 8 of the loan, meaning if you wanted to make a claim after this, you would not be able to.

 

Commission

This is a payment made to the broker for arranging from the lender for arranging their financial product for you to buy. It is a widespread practice and a way of getting their product before their competitors, but banks and lenders failed to tell customers how high this commission was. The average commission payment was 67% of the cost of the loan so for every £1,000 you borrowed you paid another £670 on top in commission. Now that you see the figure, it seems ludicrous!