The Competition Commission recently ruled that lenders must stop selling Payment Protection Insurance (PPI) alongside loans after years of hard-selling techniques that raked in billions on insurance cover that often cannot be claimed on.
Along with reclaiming unfair bank charges, consumers are now thronging to get compensation for mis-sold loans and credit cards.
Ironically, one of the hard-selling techniques of flogging PPI to unsuspecting consumers includes making the sale of PPI a condition of the loan and failing to inform the borrower. If this is the case the loan potentially becomes unenforceable in a court of law. If the borrower did not request PPI and the Consumer Credit Agreement contains a computer generated tick in the box for PPI instead of a hand ticked box – the law presumes that the borrower was not informed of the inclusion of the insurance and the entire loan might be written off.
Barclays is trying to challenge the ban on the lucrative sale of the infamous personal protection insurance and along with all the other lenders, the bank is trying to claw back money they are losing by other equally questionable means.
Banks are looking at every way they can to make money out of lending money, and one of the most obvious ways is to raise APR rates on personal loans. They are now predicted to settle at a whopping 10% by summer.
A year ago, when base rate was 5.25%, a £7,000 loan typically cost 6.9% – a difference of only 1.65%. Now with base rate a mere 0.5%, the cheapest rates for the same-size loan average around 8.5% making an eye-watering margin of 8%.
If the banks will stop at nothing to make money out of us, we should feel able to turn around and fight them at their own game and challenge whether they have sold us an unenforceable credit card or loan.
