Payment protection insurance (‘PPI’) is intended to cover a borrower’s unexpected loss of income as a result of redundancy, accident, illness or some other specified event, and a consequent inability to pay loan, mortgage, credit card or other credit repayments. It was sold by many financial institutions as part of a lending package or a credit card arrangement. It transpires that many of these policies were mis-sold.
The Financial Conduct Authority explains in its guidance to consumers ‘How to claim for mis-sold PPI’ that the mis-selling arose for a range of reasons including:
- the debtor had been pressured into taking out PPI;
- it had not been made clear that PPI was optional;
- the debtor had been advised to take out PPI but it was not suitable
- the policy had been added to the debtor’s loan without his knowledge;
The purpose of this note is to provide guidance to office holders who are dealing with Trust Deeds or sequestration cases about the issues that may arise where the debtor may have been mis-sold PPI.
This guidance does not constitute legal advice nor does it seek to instruct or direct IPs in the administration of their insolvency cases. The bodies issuing this guide do not accept any liability in respect of actions that IPs may take in accordance with it, as it must be for each IP to be satisfied that his conduct meets the legal and professional requirements placed upon office-holders. Notwithstanding the above, IPs should have regard to the regulatory as well as legal consequences of their actions.
This guidance is issued jointly by:
- Insolvency Practitioners Association
- The Institute of Chartered Accountants in England & Wales
- The Association of Chartered Certified Accountants
- The Institute of Chartered Accountants of Scotland
- Chartered Accountants Ireland
- Solicitors’ Regulatory Authority
- Association of Business Recovery Professionals (R3)
- Debt Resolution Forum