PPI Claims are going to cost banks billions in compensation to consumers.

This industrial mis-selling which took place was not going unnoticed in the insurance sector, yet nothing was being done, and consumers were paying the price; at least from Financial Ombudsman Service’s perspective (FOS). An FOS spokesperson claimed that the insurance industry is in part responsible for these mis-sellings, since they did not take a proactive role and stop them from continuing.

The insurance industry has been seen as less culpable in the eyes of most people, even though they had knowledge in the mis-selling which was occurring, and they should also be held accountable for their errors and not stepping in sooner. The insurers had a responsibility as part of the product delivery to ensure their policies are sold in accordance with regulations and FSA/FCA compliance requirements.

Although most of the blame has been put on banks, for charging consumers with these huge PPI insurance premiums, and not letting them know they were being charged, or not informing consumers they had the option to stop paying for the coverage, the insurance sector had a duty to step in, and failed the consumers in their duty to provide these policies in a fair manner.

Although you can obtain PPI coverage from your lender, it is not always needed.

Make sure you need the coverage before purchasing it, because it can get very expensive to obtain. However, if you do decide to purchase PPI insurance, decide on the right coverage for your needs, in order to save the most money. Many companies today are offering standalone PPI, which can protect any loans you have taken more cheaply than using your lenders’ own insurance.

There are a couple different kinds of ways PPI providers vary coverage, but there are two basic choices which the consumer must make.

First, decide on the coverage you need. From accident/sickness, to unemployment coverage, to illness/death coverage, the more coverage purchased, the more expensive it will be. Second, you must backdate the benefits of your coverage so that you are paid for the periods prior to the normal 30 to 60 days period.

Make sure the coverage you are purchasing is necessary, and that you are not paying for double coverage. Redundancy is a theme among many individuals who purchase PPI coverage; therefore don’t fall into the trap from insurers to pay for something which you are already covered by with another policy.

Recently in the UK, many bankers have been fined and ordered to pay back the individual consumers who have loans through their banks.

Due to a recent judicial hearing earlier in 2011, the banks were found to be guilty of mis-selling clients, and not telling them that they were being sold PPI insurance on their loans. And, if the individuals were aware of the PPI insurance charge, many of them had been told by banks that they were required to purchase this PPI insurance if they were taking a loan with the bank, which is not the case, and is not the law in the UK.

So, the higher court ruled that the banks will have to pay back borrowers for years and 1,000′s of pounds which they have been charged for these mis-sellings on their PPI insurance policies.

If you are not sure whether or not your bank is included in the pool of those who have been fined, make sure to contact them as soon as possible, and file your claim. Even if there is a possibility you feel you were mis-sold on a policy, make sure to call your bank, and begin the claims process for your refund.

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Who is to blame for the PPI scandal? This still is not clearly answered. Many are debating as to what extent the insurance industry can be held responsible. They have definitely made a profit from all of this as well as the banks who didn’t interject this earlier on.

Eric Leenders of the BBA defended the banking sector by saying that banks complied with regulations. He said that if the insurance industry questioned the sale practices used, they should have spoken up. There were such increased sales levels during the time of the scandal that the insurance industry should have questioned it then. So it does appear that the insurance industry is somewhat accountable for the scandal involving PPI mis-selling, but the banks are the ones who actually did the act.

Banks are beginning to feel a strain from the large number of customer complaints concerning the PPI scandal.

Public anger is being channelled mainly at the banks. This is what has led to prominent banking figures questioning the insurance industries involvement. With this PPIscandal, as with all scandals, both sides will find reasons to blame the other. With time we will hopefully learn the truth and move on.