What if the PPI wasn’t for you?

Here’s an interesting thought.

Most people will be aware of the issues surrounding the mis-selling of PPI. I’ve recently been helping a friend with a rather complicated series of complaints against various financial institutions and he raised a rather interesting point regarding PPI which I’d not thought about or been aware of previously.

What if the PPI is not for the customer’s benefit / safety but for the lender’s? My friend highlights the fact that his PPI was cancelled at the very same time that one lender issued him with a default notice.

Interestingly his lender, aware that he was having issues, at no time prior to issuing the default suggested to him that he should consider availing of his insurance protection to cover his payments. Is it not somewhat “suspicious” that at the very same time a borrower is defaulted that their insurance is also deemed void?

What possible reason would a lender have for cancelling a borrowers PPI? After all, it’s one mechanism whereby the lender stands to recover some (up to six months worth of payments in most cases) monies in the event that a borrower falls into difficulties and defaults.

Could it be that the lender, seeing the default potential, calls in the PPI themselves? How many of you have ever seen your PPI insurance documents? How many of you even know who your PPI insurance underwriter actually is? Most people who have PPI up until very recently thought it was an entirely legitimate and worthwhile form of protection to have in the event that ones financial circumstances should unexpectedly change. The experience of my friend suggests otherwise.

Having been defaulted, and simultaneously advised that his PPI had been cancelled, his account was passed on to RMA (subsequently bought over by NCO Europe Ltd) who more or less immediately began a campaign of harassment to recover the outstanding “debt”. On learning of his circumstances I advised him to ask NCO Europe to provide to him proof of the debt under the terms of the Consumer Credit Agreement. Rather than provide him with the proof they immediately passed the “debt” back to his lender. Within two weeks his lender, without informing him, had farmed it out to Allied Credit International. Again I advised him to to ask them to provide him with proof of the “Debt” and again they referred the “debt” back to the lender. One would think that a proof of debt would be a reasonably easy instrument to provide someone with in the event that you wished to engage them to collect a debt on your behalf.

Apparently not.

Despite several (6) requests to his lender for a copy of his then PPI agreement a copy still remains outstanding. His lender, it appears, would rather not provide him with same.

This is, I’m sure you’ll agree, a rather curious set of circumstances. Perhaps there never was a PPI policy in place? Too risky. Perhaps there was and the lender claimed on it as they defaulted the borrower – now that would make sense.

It’s the perfect storm. A lender sells a PPI policy to a borrower on a monthly instalment basis having paid for it up front but never sends the borrower the policy. The borrower gets into difficulties and the lender calls in their policy whilst defaulting the borrower at the same time.

In such a scenario the insurance pays out to the lender but the “debt” still remains. This is then either future purchased by one of the debt collection agencies or farmed out to one of the lenders preferred collection agencies. Either way there is the potential for a double whammy whereby the borrower has his / her credit rating destroyed and has to put up with letters and calls from a company trying to recover a “debt” which not only may well have already been settled by way of a PPI payout to the lender but also that they cannot, or will not, provide proof of a legal entitlement for them to collect.

It’s a very interesting and intricate set up – one which neither the lender nor any of the collection agencies involved want to elaborate on / clarify or provide legal proof of their entitlement.

This week he has received two entirely contradictory responses to Subject Access Requests, one from the lender and one from one of the collection agencies. Neither, despite making references to “instructions” between each other, has provided any proof or record of these “instructions” nor indeed any Deed of Assignment nor proof of the debt which they purport to have a legal right to collect.

The plot thickens!! This week my friend will be availing of the director records available via Companies House and writing to Mr Nick Ford of NCO Europe in an attempt to ascertain from him how he and his company satisfy themselves as to their legal entitlement to collect a debt where a PPI policy has been in place in respect of same.

Watch this space.

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