What is store card PPI?

Store Card PPI is Payment Protection Insurance that was sold alongside store cards by most leading high street retailers. It was designed to provide temporary cover for store card repayments in the event of accident, sickness or redundancy. However, much like PPI alongside loans, credit cards and mortgages, it was the subject of various mis-selling practices, which resulted in it being sold to customers for whom it was unsuitable.

Background

In January 2007, the Financial Services Authority ('FSA') fined GE Capital Bank ('GE'), the company that runs store cards for many major retailers. GE was fined £610,000 for failing to treat customers fairly in respect of PPI sales. The FSA found that sales staff were not trained or monitored properly and that GE did not have appropriate systems in place to ensure that customers received relevant information. GE was also required to compensate customers who had been mis-sold store card PPI.

In August 2010, the FSA published its controversial handbook on PPI sales, identifying numerous 'failings' in the PPI market and laying down guidelines for lenders to compensate customers who had been mis-sold PPI. In May 2011, banks and lenders withdrew their legal challenge to the FSA's measures, opening the floodgates to thousands of complaints regarding PPI, including store card PPI. Banks, lenders and store card providers were exposed to countless claims for full refunds in respect of mis-sold PPI.

Mis-selling practices

Sales staff in high street chain and department stores were often heavily incentivised to push store card PPI as a product. Often, these employees would have no financial background and they frequently received little training in respect of PPI. Sales staff often led customers to believe that PPI was compulsory to be approved for the store card, or omitted to tell them that it was optional. On some older cards, application forms even included pre-ticked boxes, meaning that customer had to opt out rather than opt in to PPI.

Store card PPI was rarely adequately explained to customers, meaning that it was often sold to those for whom it was inappropriate. For example, anyone who was unemployed, self-employed or retired would be ineligible to claim on the policy. Students, short term contract workers and those working fewer than 16 hours per week were also likely to be excluded, as were those with a pre-existing medical condition. Certain limitations were also applied to 'sickness' claims on store card PPI policies. For example, they would frequently not cover back pain or psychological conditions, such as stress and depression.

How is store card PPI calculated?

Store card PPI tends to be calculated as a proportion of the balance on the card. It usually costs approximately £10 per year per £100 of the balance. More information on how much PPI compensation you can claim. For example, if you had £1,000 on your card, you would be paying in the region of £100 per year in PPI. If you had the card for five years, with a steady balance, you would be due a refund of £500, plus interest at 8% per year.

Contact

If you have PPI alongside a loan, credit card, mortgage, store card or other financial product, contact The Claims Connection on 0845 009 6899 or fill in our PPI form for a free, no obligation case assessment. You may be entitled to a full refund.