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Topic Review
Payment Protection Insurance in the United Kingdom
Payment protection insurance (PPI), also known as credit insurance, credit protection insurance, or loan repayment insurance, is an insurance product that enables consumers to ensure repayment of credit if the borrower dies, becomes ill or disabled, loses a job, or faces other circumstances that may prevent them from earning income to service the debt. It is not to be confused with income protection insurance, which is not specific to a debt but covers any income. PPI was widely sold by banks and other credit providers as an add-on to the loan or overdraft product. PPI usually covers payments for a finite period (typically 12 months). For loans or mortgages this may be the entire monthly payment, for credit cards it is typically the minimum monthly payment. After this point the borrower must find other means to repay the debt, although some policies repay the debt in full if you are unable to return to work or are diagnosed with a critical illness. The period covered by insurance is typically long enough for most people to start working again and earn enough to service their debt. PPI is different from other types of insurance such as home insurance, in that it can be quite difficult to determine if it is right for a person or not. Careful assessment of what would happen if a person became unemployed would need to be considered, as payments in lieu of notice (for example) may render a claim ineligible despite the insured person being genuinely unemployed. In this case, the approach taken by PPI insurers is consistent with that taken by the Benefits Agency in respect of unemployment benefits. Most PPI policies are not sought out by consumers. In some cases, consumers claim to be unaware that they even have the insurance. In sales connected to loans, products were often promoted by commission based telesales departments. Fear of losing the loan was exploited, as the product was effectively cited as an element of underwriting. Any attention to suitability was likely to be minimal, if it existed at all. In all types of insurance some claims are accepted and some are rejected. Notably, in the case of PPI, the number of rejected claims is high compared to other types of insurance. In the rare cases where the customer is not prompted or pushed towards a policy, but seek it out, may have little recourse if and when a policy does not benefit them. As PPI is designed to cover repayments on loans and credit cards, most loan and credit card companies sell the product at the same time as they sell the credit product. By May 2008, 20 million PPI policies existed in the UK with a further increase of 7 million policies a year being purchased thereafter. Surveys show that 40% of policyholders claim to be unaware that they had a policy.{{Citation needed|date=August 2010} "PPI was mis-sold and complaints about it mishandled on an industrial scale for well over a decade." with this mis-selling being carried out by not only the banks or providers, but also by third party brokers. The sale of such policies was typically encouraged by large commissions, as the insurance would commonly make the bank/provider more money than the interest on the original loan, such that many mainstream personal loan providers made little or no profit on the loans themselves; all or almost all profit was derived from PPI commission and profit share. Certain companies developed sales scripts which guided salespeople to say only that the loan was “protected” without mentioning the nature or cost of the insurance. When challenged by the customer, they sometimes incorrectly stated that this insurance improved the borrower's chances of getting the loan or that it was mandatory. A consumer in financial difficulty is unlikely to further question the policy and risk the loan being refused. Several high-profile companies have now been fined by the Financial Conduct Authority for the widespread mis-selling of Payment Protection Insurance. The Financial Conduct Authority (FCA) fined Clydesdale Bank Plc (Clydesdale) £20,678,300 for serious failings in its Payment Protection Insurance (PPI) complaint handling processes between May 2011 and July 2013. This is the largest ever fine imposed by the FCA for failings relating to PPI. Clydesdale agreed to settle at an early stage of the FCA’s investigation and therefore qualified for at 30% stage 1 discount. Were it not for this the FCA would have imposed a financial penalty of £29,540,500.Alliance and Leicester were fined £7m for their part in the mis-selling controversy, several others including Capital One, HFC and Egg were fined up to £1.1m. Claims against mis-sold PPI have been slowly increasing, and may approach the levels seen during the 2006-07 period, when thousands of bank customers made claims relating to allegedly unfair bank charges. In their 2009/2010 annual report, the Financial Ombudsman Service stated that 30% of new cases referred to payment protection insurance. A customer who purchases a PPI policy may initiate a claim for mis-sold PPI by complaining to the bank, lender, or broker who sold the policy. Slightly before that, on 6 April 2011, the Competition Commission released their investigation order designed to prevent mis-selling in the future. Key rules in the order, designed to enable the customer to shop around and make an informed decision, include: provision of adequate information when selling payment protection and providing a personal quote; obligation to provide an annual review; prohibition of selling payment protection at the same time the credit agreement is entered into. Most rules came into force in October 2011, with some following in April 2012. The Central Bank of Ireland in April 2014 was described as having "arbitrarily excluded the majority of consumers" from getting compensation for mis-sold Payment Protection Insurance, by setting a cutoff date of 2007 when it introduced its Consumer Protection Code. UK banks provided over £22bn for PPI misselling costs – which, if scaled on a pro-rata basis, is many multiples of the compensation the Irish banks were asked to repay. The offending banks were also not fined which was in sharp contrast to the regime imposed on UK banks. Lawyers were appalled at the "reckless" advice the Irish Central Bank gave consumers who were missold PPI policies, which "will play into the hands of the financial institution."
  • 674
  • 25 Oct 2022
Topic Review
Payment for Ecosystem Services
Payment for ecosystem services (PES) is a market-based policy approach intended to foster land use practices, such as forest conservation or restoration, that protect and improve the social benefits from healthy, functioning ecosystems. While PES programs are used globally, they are an especially prominent environmental policy tool in Latin America, where the vast majority are payment for hydrological services (PHS) programs. PHS programs incentivize the conservation and restoration of ecosystems associated with water production and clean water for clearly defined water users, such as household water users, industries and farmers. As a market mechanism, PHS approaches involve a transactional relationship between upstream water producers and downstream water users who are connected by a shared watershed.
  • 481
  • 22 Nov 2021
Topic Review
Patient-Centered Self-Management
The difficulty of Chronic kidney disease (CKD) management lies in how it is a comorbid and progressive disease. A pure biomedical approach is inadequate. It is recommended that an integrated Patient-Centered Self-Management (PCSM) approach with health literacy and information technology intervention, which unifies and integrates patient education, can address the difficulties that are contributing to unsuccessful treatment outcomes. An integrated PCSM model should be implemented systematically and methodologically into future CKD management and health policies.
  • 732
  • 25 Mar 2021
Topic Review
Pathways to Tourist Loyalty in Pakistani Tourism Industry
Tourist loyalty (TL) holds paramount importance in securing the long-term prosperity of a tourist destination. When tourists perceive comfort and a sense of belonging in a place, their inclination to return and advocate for it rises, resulting in cost savings for local tourism industry stakeholders.
  • 186
  • 18 Dec 2023
Topic Review
Pascal's Wager
Pascal's Wager is an argument in philosophy presented by the seventeenth-century French philosopher, mathematician and physicist Blaise Pascal (1623–62). It posits that humans bet with their lives that God either exists or does not. Pascal argues that a rational person should live as though God exists and seek to believe in God. If God does not actually exist, such a person will have only a finite loss (some pleasures, luxury, etc.), whereas he stands to receive infinite gains (as represented by eternity in Heaven) and avoid infinite losses (eternity in Hell). Pascal's Wager was based on the idea of the Christian God, though similar arguments have occurred in other religious traditions. The original wager was set out in section 233 of Pascal's posthumously published Pensées ("Thoughts"). These previously unpublished notes were assembled to form an incomplete treatise on Christian apologetics. Historically, Pascal's Wager was groundbreaking because it charted new territory in probability theory, marked the first formal use of decision theory, and anticipated future philosophies such as existentialism, pragmatism and voluntarism.
  • 1.4K
  • 23 Nov 2022
Topic Review
Participatory Corporate Social Responsibility
Corporate social responsibility (CSR) provides companies with two benefits: creating social value and strengthening consumer relationships. Companies implement various types of CSR to maximize the positive effects of CSR, participatory CSR being one of these types.
  • 140
  • 31 Jan 2024
Topic Review
Participatory Budgeting
Participatory budgeting (PB) is a process of democratic deliberation and decision-making, in which ordinary people decide how to allocate part of a municipal or public budget. Participatory budgeting allows citizens to identify, discuss, and prioritize public spending projects, and gives them the power to make real decisions about how money is spent. PB processes are typically designed to involve those left out of traditional methods of public engagement, such as low-income residents, non-citizens, and youth. A comprehensive case study of eight municipalities in Brazil analyzing the successes and failures of participatory budgeting has suggested that it often results in more equitable public spending, greater government transparency and accountability, increased levels of public participation (especially by marginalized or poorer residents), and democratic and citizenship learning. The frameworks of PB differentiate variously throughout the globe in terms of scale, procedure, and objective. PB, in its conception, is often contextualized to suit a region's particular conditions and needs. Thus, the magnitudes of PB vary depending on whether it is carried out at a municipal, regional, or provincial level. In many cases, PB has been legally enforced and regulated; however, some are internally arranged and promoted. Since the original invention in Porto Alegre, Brazil, in 1988, PB has manifested itself in a myriad of designs, with variations in methodology, form, and technology. PB stands as one of several democratic innovations such as British Columbia's Citizens' Assembly, encompassing the ideals of a participatory democracy. Today, PB has been implemented in nearly 1,500 municipalities and institutions around the world.
  • 765
  • 09 Oct 2022
Topic Review
Participative Decision Making (PDM)
Participative decision making (PDM) is the opportunity for an employee to provide input into the decision-making process related to work matters (i.e., work organization, task priority) or organizational issues, for example, when they have a say on promoting new strategy ideas. Elele and Fields state that PDM is a management initiative based on the ”theory Y”, which suggests that employees are interested in being committed and performing well if managers value their contributions in making decisions that affect the nature of work. The diverse opportunities to participate in the decision-making process can provide mutual benefits for employees and employers. Some writers have proposed that PDM enhances motivation, organizational commitment, and job satisfaction. The literature frames employee participation in different contexts, depending on the political, social, and legal environment of the countries.
  • 14.6K
  • 05 Aug 2021
Topic Review
Participation in Political Crowdfunding during COVID-19 Pandemic
Participation in the political process is the fundamental right and responsibility of a citizen. Online political participation has gained popularity as it is convenient and effective. Political crowdfunding helps political candidates and parties pledge funds, usually small, from a large population and seek support through marketing campaigns during elections.
  • 364
  • 04 Aug 2022
Topic Review
Pareto-Efficient Envy-Free Division
Efficiency and fairness are two major goals of welfare economics. Given a set of resources and a set of agents, the goal is to divide the resources among the agents in a way that is both Pareto efficient (PE) and envy-free (EF). The goal was first defined by David Schmeidler and Menahem Yaari. Later, the existence of such allocations has been proved under various conditions.
  • 332
  • 23 Nov 2022
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