PPI Problems Continue With Brokers Going Broke

25/11/2009 by Bradders.

As we enter the next decade the inevitable is starting to happen as the rush to make a ppi complaint to get compensation gathers pace. The halcyon days of easy credit that made loan and mortgage brokers big profits is a distant memory but the associated products like payment protection insurance that was sold alongside the loan has come back to haunt them. PPI was the overpriced insurance that many brokers bolted on to their credit agreements to cover the borrower for loan repayments in the event of accident sickness or unemployment.

Unfortunately for the consumer in a lot of instances it was something they didn’t want, didn’t need and in a lot of instances didn’t ask for, Even if they did ask for it in a lot of instances they could never claim for it due to the small print and exclusions in the policy. There has been such an outcry over the last year the FSA has decided to re-open nearly 200,000 ppi complaints that were turned down for dubious reasons. However, due to the fact that the finance markets are not as profitable as they once were and there is a potential compensation tsunami around the corner there is growing concern that many of the smaller firms are planning ways to shirk their responsibilities.

The Financial Services Authority has warned that its crackdown on firms that missell payment protection insurance may lead to an increase in phoenix firms. This is the cynical practice of closing an existing firm down to emerge very soon after as basically the same company with a different name. Leslie Titcomb director of small firms at the FSA told delegates at the recent Mortgage Business Expo that the regulator has its eye on several firms in regards to this.

She believes the problem has been exasperated by the  prospect of companies having to reassess past ppi complaints they have rejected. This will almost certainly make the prospect of companies considering the
Phoenix route a lot higher as a way of ridding themselves of these ppi complaints and compensation.

Brad Martin of Claimline
UK said “We are now noticing that a lot of our claims are now starting to build up with the Financial Services Compensation Scheme. This is due largely to a number of well known brokers going to the wall and the responsibility being passed to the FSCS. It’s very frustrating that just when a case is coming to closure via the FOS the whole ball game changes and the ppi complaints then get passed to another body and the whole process starts again”Brad recommends that anyone who has used a broker for a sub prime mortgage and feels they have a ppi complaint should act sooner rather than later

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