Why are banks happy to pay back PPI loan insurance?

To be honest, companies are really hit by PPI loan and credit card insurace claims.,
By: Solvemybadcredit Laura Wolf
 
Dec. 20, 2010 - PRLog -- To be honest, companies are really hit by PPI loan and credit card insurace claims. They although never or hardly ever refuse to repay insurance payments to customers, and you might be wondering why, as many of the banks on the High street have already withdrawn from selling payment protection insurance. What are the reasons behind that and how you can, too reclaim payment protection insurance charges.

Martin Lewis stirred up the UK consumer community when he stated that PPI was illegal in TV. However we have to know that banks were signed up for selling payment protection insurance, however were strictly regulated at the time by the FSA. Some people were aware of buying this product, and if you took the loan from a bank directly, it was clearly stated in your documents. So if the banks are on the right, why do they pay back all that money?

Easy answer: bad credit debts. If you haven't noticed, the economy is still in recession, and banks have spent the last 3 years chasing people owing them money. More and more people are getting made redundant, miss payments, fall ill, therefore it is actually much cheaper for companies to pay back the whole amount of insurance than write off the loan or credit card balance as a bad debt due to a successful claim.

Banks are struggling to get back bad debts, and have no money to throw into costly law suits, a small claims court case is costing them £150 plus the lawyers, and it is not worth the money. They are also keen on their reputation and want to receive as little number of complaints through the FSA and Ombudsman service as possible.

Banks can charge you fees and interest if you have no insurance and miss payments, and it is a huge amount of money they would be losing out.

They do not have the staff to investigate the payment protection complaints. Banks just downsized almost every single department in the past few years, so do you think, they have enough people to investigate every single telephone call, financial review or meeting? I do not think that any bank can deal with that amount of work, and it would cost them much more than issuing a refund.

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Tags:Ppi Insurance, Payment Protection Insurance Claim, Bad Credit Debt
Industry:Banking, Financial, Insurance
Location:Wirral - Merseyside - England
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