PPI and the Case of the Graduate Loan

At Payment Protection Scotland, we have been publishing helpful articles for many years – since the PPI compensation process started – and we thought it would be fun to take a look back at some of our earlier offerings. It is also a chance to see how things have changed in the world of PPI compensation and banking.

This case told the story of Martin, an undergraduate at the time he took out a loan, complete with PPI, just in case that ‘rainy day’ did strike.

Back then...

Martin was a young man full of hopes and dreams as he stood at the front, grand entrance of a respected Scottish university. He knew the next few years would be tough but he would get through.

Financially, things were a little strained at times and although he worked as well as studied, he found himself struggling, unable to pay basic bills. With heavy heart and trepidation, he approached the bank he had banked with since he was a child.

He applied for a graduate loan. Realising he was not a good prospect – he was a student with little income – he hoped his future career prospects would stand him in good stead.

The bank’s sale representative was a pleasant young woman, similar in age and ambitious outlook. She wanted to help Martin as much as possible and suggested his loan application would be looked on in a more favourable light if he did all he could to make his ability to repay the loan as good as possible.

Payment protection insurance (PPI) was the magic answer. And so, Martin signed on all the dotted lines, the bank’s sales representative looked pleased. They shook hands and Martin left.

Imagine his surprise and delight when his account was credited with the graduate loan he had asked for.

Present day

Martin is now a successful professional, making his way in his chosen profession. Although now on a good salary, life can still be tough financially. What would help is if he could pay off the graduate loan.

And then the PPI mis-selling debacle made headlines and Martin realised he had been duped back in his university days:

• The pleasant sales representative was probably on a very basic salary and needed the commission from the PPI sale to significantly boost this income. Her desire to get Martin the loan was not driven by the need to get her customer the best deal but to boost her income.

Update – the Plevin case has now made provision for such cases. If it hasn’t already been included in Martin’s PPI compensation, if the representative earnt more than 50% in commission and he didn’t know about it. He could claim this money back too.

• He also realised that the PPI policy would not cover him on two counts:

1. Martin was a student, therefore according to the terms and conditions of the policy was considered economically inactive and was therefore not covered
2. Martin also had a pre-existing medical condition which had, in the past as well as modern day, stopped him from working for short periods. If he had needed to stop employment as a result of his condition, he would not have been covered.

Martin quite rightly, like many other customers of all the UK banks, felt offended and affronted at being duped into buying an insurance policy that was useless.

Update – Martin was uncertain about claiming compensation because he had agreed to buy PPI. But, as our team pointed out, he hadn’t been given all the information about the policy. If he had, he wouldn’t have bought it in all probability.

Martin is now enjoying life without his loan as he paid it off from the PPI compensation he received. It also left him with a little extra to put in his house buying pot.

Were you been duped into buying PPI?

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