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Don't settle for banks' opening offers over mis-selling of PPIs

THE battle to claim hundreds of millions in refunds for consumers who were sold a controversial insurance product is coming to a head.

Last week, the Central Bank summoned lenders for crunch meetings after completing a probe into Payment Protection Insurance (PPI).

And at the end of this week it will release the results of this investigation.

"We will be publishing a letter to industry. . . and an information release," a spokeswoman told the Sunday Independent.

The probe is believed to have uncovered evidence of PPI being inappropriately sold to borrowers -- and costing thousands of euro.

PPI kicks in when you lose your income through illness or redundancy. Yet it has been sold to people who had no income to protect -- students, homemakers, retired people and even the unemployed.

More commonly, it was sold to the self employed and state employees who could derive little benefit from it.

The Central Bank investigation into PPI has coincided with a spate of refunds and letters from lenders. Last month it emerged that BoI paid over €1m in refunds to 1,500 PPI customers who could never have made a claim.

AIB also refunded €3.1m to 11,500 customers -- an average of €270 each -- over a "breakdown in its verification systems".

Again some customers had policies they couldn't claim on and the bank failed to spot discrepancies in their documentation that would have highlighted this.

Both banks deny that mis-selling was involved but admitted that they should have noticed customers were ineligible to claim for a policy costing them a lot of money.

Now, GE Money has sent a letter admitting that some customers may have had inappropriate cover through an "administrative error."

One woman, who spoke to us, was informed that the form of cover she and her husband took out "provided life, accident, sickness and redundancy benefit."

"However, the employer details we hold indicate that you may have been self-employed or state-employed," the letter stated.

It added that another form of cover, which included critical illness benefit "may have been more appropriate to you."

GE then offered to retrospectively apply critical illness cover -- if one of a limited list of illnesses was suffered during the insurance period. A GE Money spokesman denied mis-selling and stressed that these customers had actively signed up for PPI but were "issued with the wrong documents."

Consumer guru Eddie Hobbs is unimpressed with the spate of refunds from AIB and BoI.

He says that if you "crunch the numbers", BoI refunded over €600, AIB paid back just €270. Yet the average PPI policy usually involves several thousand euro -- plus interest.

"They are trying to get away with settling for the cheapest amount. They are offloading their most vulnerable cases," he says.

"You have to say don't accept anything at the opening of something like this. People get caught in the headlights and settle for the cheapest offer."

He advises that the first step, if you have a PPI issue, is to write to your lender. He has prepared a letter template as part of The Consumer Show's PPI campaign on RTE. This letter can be downloaded free at the RTE website

PPI issues sometimes involve mis-selling, so whoever sold you the policy (usually the bank) is responsible. Don't be fobbed off by being referred to the insurer, he advises.

The Financial Services Ombudsman can also help (to contact them, just call 1890 882090 or go online). However, he won't consider cases where PPI was sold more than six years previously, ruling out anyone who bought it before 2006.

He also found in favour of the banks in 67 per cent of PPI cases last year. And the remaining cases that went the consumer's way may have involved only partial refunds.

This is a far cry from the UK where its financial Ombudsman found in favour of consumers in 82 per cent of PPI cases in the year to last March.

The courts are the last resort for consumers with PPI issues.

"There are hundreds of cases that are about to go to court. If they have any sense they'll settle before then," says Eddie Doyle, managing director of the company behind www.refund.ie, which has 65 cases ready for a July hearing.

He says he's "never come across" a PPI sale where the consumer knew exactly what they were buying.

Banks generally stonewall PPI complaints dragging it out as long as possible -- but there are some positive signs for claimants, according to Mr Doyle.

"Ulster Bank seems to be taking the view to pay back more readily, which is out of step with the rest of the banks and MBNA," he says.

All of the three claims specialists we spoke to (Refund.ie, financeclaims.ie and McHale Muldoon solicitors) listed MBNA as the biggest source of PPI issues for them.

When contacted by the Sunday Independent, MBNA said: "We don't respond to this kind of speculation, and we'd never comment on individual customer cases."

McHale Muldoon have 43 cases lined up for court appearances in the coming months. However, Cork-based Finance Claims is holding fire until the Central Bank report comes out later this week.

"The banks are saying we know we have issues but we'll wait for the Central Bank report," says managing director Sam Shiraz.

"Most lenders know how unsettling legal action can be for some consumers and I personally believe some use these scare tactics to their advantage.

"This is always going to be an issue until such time as the Central Bank steps in and rectifies this situation by giving us their ruling. Hopefully they will this week. I am an eternal optimist!"

Sunday Indo Business