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A major victory in the battle against rip-off loan insurance has been won with insurers agreeing to offer 'fair' refunds when customers cancel policies.
PPI is the insurance sold alongside loans, credit cards and other finance agreements to keep up repayments for a period if you are unable to pay through accident, sickness or unemployment in some circumstances.
It means that, despite cancelling a PPI policy, the size of their regular repayments hardly changes. But now the FSA has deemed such arrangements to be an unfair term under the Unfair Terms in Consumer Contracts Regulations.
The deal will apply to insurers that are members of the Association of British Insurers, the British Bankers' Association, the Council of Mortgage Lenders, the Finance and Leasing Association, and Protect.
This is Money says: The miserly refunds on offer from single premium PPI policies are one of the most repellent aspects of this product and one of the most common causes of complaint.
If you want to cancel a single premium PPI policy and are not happy with the refund that has been offered you should write to your insurer – or the firm that sold you the insurance – citing that firms have to give fair refunds under the Unfair Terms in Consumer Contracts Regulations and that they must explain how they came to the refund level.
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