Protection insurance scandal grows
A new banking scandal is growing over reports that lenders are refusing to honour Payment Protection Insurance (PPI) polices.
One in six claims are being rejected because of exclusion clauses or because policies were mis-sold to people who would never be able to claim, according to The Sunday Times.
The Financial Ombudsman is receiving 30,000 complaints a year - up from 2,000 three years ago - of which nine out of 10 are being upheld.
The insurance, meant to cover repayments on mortgages, credit cards and loans in the event of unemployment, generates around £6 billion a year in premiums for the lenders.
A spokesman for the regulator says that while the vast majority of complaints concern mis-selling rather than rejections, some of those could have been triggered by a failed claim.
"Some people might only realise that they were mis-sold it if they do make a claim," he says, while others did not even realise they were taking out the insurance because it was bundled with the loan.