Homeowners across the UK will have cause to look carefully at any past loans or purchases they have acquired, as a High Court ruling on Payment Protection Insurance (PPI) made retrospective claims on the mis-selling of such policies a possibility for many consumers.

How it should work

PPI is unlike most other insurance products but millions of policies have been sold over the last few years. Unlike a conventional home insurance policy PPI was often sold to customers signing up for loans without them grasping the fact that they were really purchasing a product. PPI basically covers a person’s loan/purchase repayments if they become sick or unemployed. It will cover the cost of repayments if the purchaser suddenly finds themselves out of work or incapable of work due to an illness.

Sold to the wrong people?

There is no doubt that like any good insurance products it can be very welcome in times of an emergency. The big problem with PPI is how it was sold! Banks and other loan companies have been accused of selling the PPI product to people who really had no call for them but did not really appreciate the fact.

Banks argument rejected

In a ruling today the High Court rejected an argument put forward by the British Bankers Association (BBA) that the recent rules update by the Financial Services Authority and the Financial Ombudsman Service were unfair because they were retrospective. Importantly, the rules also stipulate how the banks should deal with past cases of potential mis-selling of PPI, a decision which could cost banks billions of pounds.

The right of appeal

The banks have 21 days in which to appeal against the reviews findings and it is for sure that is exactly what they will do. In the meantime homeowners who think they have been mis-sold PPI in the past should look for any saved documentation of the loans taken out. There is a chance they did indeed sign for PPI without knowing it, in which case they may have a claim.

Compensation could amount to billions

As experts reckon the average claim could easily be £1000, and the total run into billions, some homeowners may get enough cash returned to sort home insurance costs and possibly other insurance costs out for the next year.