Payment protection insurance ('PPI') is intended to cover a borrower's unexpected loss of income as a result of redundancy, accident, illness or some other specified event, and a consequent inability to pay loan, mortgage, credit card or other credit repayments. It was sold by many financial institutions as part of a lending package or a credit card deal. It transpires that many of these policies were mis-sold. The Financial Services Authority explains in its guidance to consumers 'How to claim for mis-sold PPI' that the mis-selling arose for a range of reasons including:
- the debtor was pressured into taking out PPI;
- it was not made clear that PPI was optional;
- the debtor was advised to take out PPI but it was not suitable;
- the policy was added to the debtor's loan without their knowledge;
The purpose of this paper is to provide office holders who are dealing with Individual Voluntary Arrangements (IVAs) or bankruptcy cases guidance about the issues that may arise when the debtor may have been mis-sold PPI.
This guidance does not constitute legal advice nor does it seek to instruct or direct IPs in the administration of their insolvency cases. The bodies issuing this guide do not accept any liability in respect of actions that IPs may take in accordance with it, as it must be for each IP to be satisfied that his/her conduct meets the legal and professional requirements placed upon office-holders. However, notwithstanding the above, IPs should have regard to the regulatory as well as legal consequences of their actions.
This guidance is issued jointly by:
- Association of Business Recovery Professionals (R3)
- Insolvency Practitioners Association
- The Institute of Chartered Accountants in England & Wales
- The Association of Chartered Certified Accountants
- The Institute of Chartered Accountants of Scotland
- Chartered Accountants Ireland
- The Debt Resolution Forum
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