PPI – Payment Protection Insurance

PPI – Payment Protection Insurance 

December 2012 

  1. Payment Protection Insurance (PPI), sometimes called ‘loan protection’, is an insurance policy typically sold when a personal loan or some other form of personal credit is granted.  The policy is designed to provide monies to meet the repayment of the loan in the event of the unemployment (or similar) of the borrower.
  2. Numerous complaints have been made about the selling of PPI policies. These complaints either relate to PPI policies that were sold without the purchaser understanding what they had purchased, or where the purchaser is unable to make a claim on the policy as the policy is unsuitable for the purchaser.  A complaint is normally made to the financial institution concerned directly, followed by a complaint to the Financial Ombudsman if the initial approach is unsuccessful.  The complaint (and any compensation payable) vests in the official receiver as trustee of a bankrupt’s estate, provided that the PPI was obtained prior to the date of the bankruptcy order.
  3. Full guidance on dealing with PPI is contained in the Technical Manual, Chapter 31.9A Rights of Action – Payment Protection Insurance.


Where can I find out more?

Further information and guidance on dealing with PPI can be found on the ORBS Intranet site under Case Guidance, Payment Protection Insurance (PPI) Guidance, which includes:

  • A link to the online questionnaire for instructing agents (secured debt PPI)
  • A list of addresses for major financial organisations PPI complaint departments
  • A list of responses from major financial organisations on whether they will apply set off

Information can also be found in the Technical Manual: Chapter 31.9A – Rights of Action – Payment Protection Insurance.  Additionally, the following Annexes attached to the Technical Manual may be of assistance:

  • FAQ – A list of Frequently Asked Questions which provides an overview of common queries relating to PPI in bankruptcy cases. 
  • Annex A – PPI questionnaire for secured debts. 
  • Annex B – PPI questionnaire for unsecured debts. 
  • Annex C – MP2 insert and guidance on how to insert text.
  • Annex D – Flowchart showing the process for dealing with PPI relating to a secured loan. 
  • Annex E – Flowchart showing the process for dealing with PPI relating to an unsecured loan.