Your comments: The protection racket

The FSA is to go undercover to check the sales procedure

Inside Money listener Karen Manning investigated payment protection insurance with Presenter Lesley Curwen, for BBC Radio 4's Inside Money on Saturday.

We asked for your comments on the issues that our programme raised.

This debate has now closed.

A selection of your comments are below.

The comments we publish are not necessarily the views of the BBC but will reflect the balance of views we have received. It is helpful if contributors state if they work for any organisation relevant to an issue discussed. Readers should form their own views on whether messages published represent undeclared interests, or views prompted by a common source.

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Why waste money on protecting unsecured debt payments?

Surely these plans just increase the debt which is rarely secured on homes or possessions.
Steve Jones

I am the coordinator at the National Association of Mortgage Victims.

I have seen numerous examples of mis-selling of payment protection.

Borrowers are devastated when they discover their policy has lapsed and they face repossession Carol Riley, National Association of Mortgage Victims

Often a lump sum payment is added to the original loan, usually of around £3.500 - £4.500.

Interest is charged on it for the entire life of the loan but the PPP only covers the first five years.

Why on earth would someone have only five years cover on a 25 year mortgage?

Borrowers are devastated when they are made redundant, or become sick, to discover their policy has lapsed and they face repossession.

The majority of policies do not cover the self-employed and yet thousands of policies are sold to them.
Carol Riley, National Association of Mortgage Victims

Thanks for raising this long overdue issue.

I was made redundant a few years ago and had to spend months chasing my insurer for payment.

It refused and eventually I had to go to the ombudsman before it eventually paid out.

Payment protection insurance is a risky game. If you take it out make sure you know it is usually weighted in their favour.
Barry Lancaster-Smith, Liverpool

My son has recently returned from university with a number of debts including loans taken out whilst he was a student.

He would never have been eligible to claim, since he had never been employed Noel, Belfast

Whilst sorting these out, I discovered he had been paying significant sums each month on payment protection, even though he would never have been eligible to claim, since he had never been employed.

I am now trying to cancel them, and am annoyed that these have contributed needlessly to his debt problem rather than offering protection.
Noel, Belfast

I recall that when taking out a bank loan a few years ago they said it was a condition of the loan that I had insurance protection.

I was working at that time in Bangkok, Thailand, and continued to do so until the company went bust three months ago.

My claim was refused on the grounds that I was working outside the UK, even though it was on my file at the bank that I was doing so when I took out the policy.

The insurance I have been paying for since 1997 is invalid Terence Sullivan, Somerset

A similar claim on my credit card policy was also refused.

Also, when I tried to sign on at the job centre, I was told I had to first register with the pension credit department.

They refused because I live with a partner who earns £12,000 a year. So I cannot register as unemployed.

The outcome of all this is that the insurance I have been paying for since 1997 is invalid, and I am not entitled to any government department's help.

At 63 I am told it is unlikely I will get a job, and the 260 jobs I have applied for in the last two months seem to confirm this.
Terence Sullivan, Somerset

I worked in the PPI Industry for three years, and would never support it.

With regard to the unemployment element of these policies, the claims are often denied because people have given false information on their loan applications.

Make sure you do not provide inaccurate information on a loan application DJ Harkness, insurance worker

I imagine that people often do this to secure the loan.

For example, a loan - and the insurance - is approved on the basis that someone has been in employment for a continuous period of six months prior to the agreement.

Many people's claims were rejected when they failed to meet this requirement.

The moral is to make sure you do not provide inaccurate information on a loan application, even if it means you don't get the loan.
DJ Harkness, insurance worker, Tunbridge Wells

I was advised to take out protection insurance when I got a loan.

When I hesitated over doing this, the helpful adviser pointed out that it was a good idea, just in case!

Now I am pregnant and - guess what - not covered for maternity leave, so find myself crippled with repayments in order to get it paid off before the new addition arrives.
Emma Turner, London

As an FSA-regulated IFA, I listened to your programme with interest whilst driving to a client appointment.

I sympathise with the lady on the programme and know that this is an area that the FSA is particularly concerned about.

However, what about the equally big scandal of the banks adding the whole single premium cost to the loan and then having the nerve to charge interest on it?

This a scandalous way to conduct business and I believe is done to get the commission upfront, secured in one hit, without any potential claw back if the business goes off the books.

If an IFA did this they'd get hung, drawn and quartered by the FSA.
Michael Crampton, IFA, Hitchin

I was made redundant from a well-paid job. I thought I would claim on a protection insurance policy I had taken out with a loan.

I had paid the insurance for three years and had two years of payments left.

I went to the job centre and signed on because this was a condition of claiming, although I was not eligible for any benefits.

I stopped going to the job centre and was not able to claim on the insurance Claire Trencher, Grays

There was little hope of getting another job similar to the one I had, as I was near retirement age.

At the time I didn't want to work far from home as I needed to look after my husband, who was waiting for an operation.

After three months the job centre staff member I saw insisted I take a job as a filing clerk.

This was unsuitable as I was recovering from an operation on my wrist.

Needless to say, I stopped going to the job centre and was not able to claim on the insurance.
Claire Trencher, Grays

I understand that many people feel they have unfairly been taken advantage of.

However, the payment protection insurance that credit unions provide is different to these policies for three reasons:

Credit unions provide excellent PPI cover and should not be tarred with the same brush as the banks and building societies Fiona Boyle, CUNA Mutual Group

You have stated that most policies do not cover stress and backache. The PPI provided by credit unions does cover these.

Not all policies cover for sickness or unemployment for up to 12 months only. In fact, the products provided by credit unions cover people off ill or unemployed for up to 24 months.

And on the policies provided by credit unions, self-employed people are covered.

Credit unions provide excellent PPI cover and should not be tarred with the same brush as the banks and building societies mentioned.
Fiona Boyle, CUNA Mutual Group, Birmingham

When I heard your programme I felt very sorry for Karen but I was also struck by her naivety.

She knew her employment status was not clear. If in doubt, stay out!

It's a lesson to us all and confirms what many people already know. Banks exist to make money. They pay their staff next to nothing, quality of service is substandard and offers no real value for money.

The time is ripe for foreign banks to enter the British financial services market Mario Angeli, London

It's good news that general insurance is now regulated but it's now time for the banks to look within themselves and change.

If not they'll lose the public's confidence and ultimately, business.

The time is ripe for foreign banks to enter the British financial services market. They see and hear the British public's exasperation and desire for good products and service, delivered by well-trained and fairly paid staff.
Mario Angeli, London

My wife and I had mortgage insurance on a £200,000 loan.

When I lost my income the bank declined to pay out due to the fact we were not granted Jobseekers' Allowance. Our assets were too high.

Having paid £60 per month for the protection it was worthless.

We were forced to sell the house. I feel conned.
Barry Southon, Eastbourne

I have two experiences of payment protection insurance on which I'd like to comment.

The first is PPI on my credit card. I had this for many years before being diagnosed with a serious illness.

I am self-employed and my income was drastically reduced. I claimed without difficulty, and my payments were met until I was able to return to work.

I noticed that the premium had been added to the amount of the loan Allan Thomson, Banchory

The second case concerns a personal loan I took out more recently over the phone.

Some pressure was put on me to take out the PPI insurance at quite an expensive rate.

As I had a pre-existing condition, in the end I was covered for death only during the period of the loan.

When I received the confirmation, I noticed that the premium had been added to the amount of the loan.

I consider that this is dubious practice.
Allan Thomson, Banchory, Aberdeenshire

When I took a mortgage in 2000, I was obliged to take out payment protection.

I did this quite happily, as it was easily affordable and I thought it a good precaution.

When I became ill with diabetes and hypertension in 2003, I made a claim and was told that the cover was not valid as I did not meet the requirements.

Even after being told that the claim was not valid, they continued to take the premiums David Williams, Barnsley

The result was that I had to sell my house and instead of a reasonably comfortable retirement, with a house to live in and one to rent, my wife and I are struggling along in the one house.

The dispute lasted for about six months while I tried to get some sense out of the building society before finally having to give in.

The annoying thing about this is that during this time, even after being told that the claim was not valid, they continued to take the premiums by direct debit!
David Williams, Barnsley

I have insurance protection on my credit card, which pays out for unemployment.

I was recently made redundant and made a claim, only to discover that I am still expected to pay the payment protection premium.

I would have thought this would be waived.

I have written a letter of complaint to the bank in question and am currently waiting for a reply.
Miss Marcia Jackson, Birmingham

The cost of the policy and the interest charged are such that I think most people would be better off putting the money they would have spent on the policy into a savings account so that they have something to pay the loan with should they be made redundant, or become unable to work.

It makes you realise the commission people earn off these kinds of policies Alison Cook, Hampshire

I took out a mortgage last year, and the broker was desperate to push one of these policies onto me, even phoning me up to five months after I'd said no to see whether he could sell me something!

It makes you realise the commission people earn off these kinds of policies. I wouldn't touch one with a barge pole.
Alison Cook, Hampshire

I work for a bank which for the last 20 years has been fully aware that the loan protector is not suitable for all customers.

Staff have always been told to quote repayments including protector payments, so customers agree to cover without knowing the terms.

I personally would never take out the cover Mark, bank worker

We even had to tell some customers they could not have the loan unless they had the protection cover!

They have always been aware that self-employed customers would not qualify for redundancy cover.

I personally would never take out the cover as it is the most expensive life cover on the market.
Mark, bank worker

How many people really read the policy until they want to make a claim? And the legal wording makes the policy difficult to understand.

You often find yourself getting into even greater debt while the insurance company makes up its mind whether to pay up or not Angus, Lincoln

You often have to be off work for at least 14 days to qualify, when for some people even a couple of days off work can mean that they are unable to meet the next payment.

If you're off work for some time they normally want various forms signed by your GP.

And you often find yourself getting into even greater debt while the insurance company makes up its mind whether to pay up or not.
Angus, Lincoln

My wife was made redundant. She satisfied all the conditions but received no money. Complaints proved useless.

She has been claiming benefit for months now.

I also had insurance, however the company stopped providing it.
Stuart, Slough

What a shame the programme missed the most important point.

These policies protect not the borrower but the lender.

It is the borrower who is paying the premium to protect the lender Mr C Sykes, Ipswich

If a borrower defaults, then it is the lender who loses, not the borrower.

Yet it is the borrower who is paying the premium to protect the lender.

FSA get with it!
Mr C Sykes, Ipswich

I broke my wrist two years ago and put in three claims on this insurance.

They all paid out but the time it took to settle the claims was ridiculous.

How many people would understand the small print anyway, even if they do read it? Lesley Roberts

I have severe arthritis and am concerned after your programme whether or not I would be covered in the event that I cannot keep on working.

I quite agree that the banks push it down your throat, and that it is exorbitant.

How many people would understand the small print anyway, even if they do read it?

It should all be made clear and then if you have not given the relevant information your cover should be void, as in normal policies.
Lesley Roberts, Cardiff

I borrowed £20,000 over five years and I took out the payment protection plan. That put the monthly repayment from £390 to £464.

I am a self-employed IT consultant and feel the bank acted like cowboys for stressing the importance of being covered.

They don't care, they just want your money.

It hurts every time I have to pay Sean, Charles

I would advise people to always read the small print.

I have another three years to go and it hurts every time I have to pay because right now I am unemployed.

I feel a bit better now!
Sean Charles

I was sold payment protection insurance which I paid for several years.

When I took it out I pointed out I was self-employed and running my own business, and asked if it would cover me should I stop work.

There was a time after 11 September when sales dived and I hadn't had any new work for five months.

I argued successfully, with several letters, that this had been mis-sold to me Name withheld

I tried to claim but was told that I couldn't unless I was declared bankrupt!

This had not been explained to me when I bought it, although I had ticked the lengthy terms and conditions on the website.

I later found it is impossible to read the terms and conditions before being "timed out" by the website.

I argued successfully, with several letters, that this had been mis-sold to me as it would never have covered someone in my circumstances.

Eventually the bank agreed to repay all the insurance I had paid over the years but did not agree any liability.
Name withheld

In 1989 I took out a mortgage. I was a self-employed partner in a business.

The broker arranged a payment protection policy with the mortgage lender.

I had to sell my house, and at a great loss too Mrs Sam Twombley

I specifically asked if this would cover a self-employed person and was told it would.

When the business failed, I was sent a claim form.

The next day I was phoned and told I wasn't covered as the small print at the back said it only covered people who were claiming unemployment benefit.

I was unable to maintain my mortgage payments. As I was facing repossession of my house and bankruptcy, I had to sell my house, and at a great loss too.

I subsequently lived on an old, cold, leaky houseboat for a number of years.
Mrs Sam Twombley

When I first came to this country from the US seven years ago, I bought a car from a local dealership.

I took payment protection out on the loan on the advice of that dealership.

I lost the car and am now paying off the balance of the loan after the car was repossessed Ed Hughes

After five years of living in the UK, and three years of loan repayments, I was made redundant.

I called the payment protection company and was told that I didn't qualify for coverage because I was considered self-employed.

I lost the car and am now paying off the balance of the loan after the car was repossessed.
Ed Hughes