Glossary · UK
What is Payment Protection Insurance (PPI)?
An insurance product, historically sold alongside loans and credit cards, intended to cover repayments if the borrower fell ill, was made redundant or died, but widely mis-sold across the UK.
Full Definition
Payment Protection Insurance (PPI) is an insurance product that was widely sold alongside loans, credit cards, mortgages and other credit agreements from the 1990s through to the early 2010s, intended to cover the borrower's repayments for a period if they became unable to work due to accident, sickness or unemployment, or to clear the outstanding balance if they died. PPI became the subject of the UK's largest ever consumer redress programme after widespread evidence emerged that it had frequently been mis-sold: policies were sometimes added to credit agreements without the customer's clear knowledge or consent, sold to people who were self-employed, retired or otherwise not eligible to claim under the policy's own terms, priced with commission that was not disclosed to the customer (later found by the courts to be unfair in cases of very high, undisclosed commission), or sold as a single upfront premium added to and charged interest on the loan itself, substantially increasing its true cost. The Financial Conduct Authority set a final deadline of 29 August 2019 for most new PPI mis-selling complaints in the UK, after an extensive public awareness campaign, though claims can occasionally still be pursued after that date in narrow circumstances, such as specific undisclosed commission cases that came to light later or complaints about how a lender handled an earlier claim. Genuine PPI-type cover still exists in the market in a more transparent form (sometimes marketed as short-term income protection or accident, sickness and unemployment cover) sold with clearer eligibility criteria and commission disclosure than the historically mis-sold products that prompted the mass redress exercise.