A report suggesting 2.6million credit card users plan to spend more on their ‘plastic’ this year to pay household bills has prompted Payment Protection Insurance lobbyist Sara-Ann Burgess to remind consumers that a PPI policy is far more effective in meeting everyday living costs and will keep debts under control rather than prolong them.

Her response comes at a time when greater numbers of people are being forced to rely on credit cards to pay bills either because of falling household incomes or redundancy. Only last month the Post Office published a survey that said 32% of adults – around 10 million people – use their credit cards for daily purchases and despite a worsening economic situation, it found that 8% or 2.6million will have a greater reliance on plastic in 2009.

Around 45% of respondents do not intend to pay their bills in full each month - not only extending the lifetime of the debt but increasing the amount owed through extra interest. Sara-Ann comments: “When finances are stretched it’s easy to think of a credit card as a good debt management tool – but it’s not. So many people who have lost an income have no choice but to use their plastic to carry them through these difficult times, but minimum monthly payments still have to be made, the amount owed and resultant interest is increasing and at one stage the final balance will have to be cleared.”

One lender recently announced the average credit card debt was £3,256. However, money education charity Credit Action estimates consumer borrowing via credit cards, motor and retail finance deals, overdrafts and unsecured personal loans was £4,870 per average UK adult at the end of January.

“It appears people are increasingly resorting to credit to meet their financial commitments which is fine when you have a job and can make the repayments, but what happens if that salary goes?” comments Sara-Ann. “Those with outstanding debts must consider ways to ensure their payments continue in the event of an income being lost and so avoid future financial hardship. Otherwise reliance on credit to pay credit will be the only option, which in the long term only racks up more debt and is unsustainable.”

Debt management firm EuroDebt confirms that over one in five new clients seek help because they’ve been made redundant or lost an income. It cites the three main reasons why their help is requested as; debts getting out of control and less access to credit to manage them, loss of income/being made redundant and poor financial management.

Credit Action predicts that one in 33 people working in the UK will become unemployed this year, giving Sara-Ann even more reason to urge consumers to use PPI as a proactive debt management tool.

She concludes: “Whilst PPI can’t help the millions who have been made redundant already, it will provide a financial safety net for those still in a job - ready to pay their bills should the worst happen. Given it could take months to secure new employment, and PPI pays cash benefits for up to a year I cannot see why more people aren’t relying on this, instead of credit to access cash when funds dry up. Cover is easily accessible via the internet at low cost.”

Premiums for PPI are calculated per £100 of benefit and purchasers can decide whether they want policy payments to meet their mortgage, loan or wider household commitments. There are options for accident, sickness and unemployment cover and specialist independent firms such as Burgesses and British Insurance are widely recognised as offering premiums that are far more affordable than higher-priced credit providers.

News that increasing numbers of people are continuing to fall behind with their mortgage repayments evidences that pleas for homeowners to purchase Payment Protection Insurance and receive a monthly income to cover debts should they lose their job is falling on deaf ears.

This is the view held by PPI lobbyist Sara-Ann Burgess, from specialist firm Burgesses, in response to recently released Financial Services Authority figures which show 377,000 homeowners were in mortgage arrears at the end of 2008, an increase of 31% on the previous year.

She says: “PPI will pay your mortgage for up to a year if redundancy occurs, so why aren’t more people taking out this low-cost cover and protecting themselves against the recession? As well as providing financial stability at a time when you need it most - it gives peace of mind. If you’re in a job, PPI takes away the worry of how to pay bills in the future if redundancy occurs and that’s a great situation to be in.”

It would certainly allay the fears of 62% of the working population who according to Which? fret about themselves or their partner losing their job, quell the anxieties of over four in 10 joint income households who worry they wouldn’t be able to pay the mortgage if the main income earner lost their job and help over a third of homeowners who are concerned about having their homes repossessed.

Sara-Ann comments: “If something’s causing you sleepless nights – namely job losses and repossession – then you do something about it. I’m mystified why more people aren’t buying PPI as it offers a solution to all these issues. I can only think people are going to rely on their savings to pay their bills.”

Feedback from Moneysupermarket suggests this isn’t the case. In a recent survey, it found a quarter of Brits have no savings to fall back on and a third or more have less in savings than two years ago.

“Why hold back on something that will take away the stress of this current economic climate?” questions Sara-Ann. “I know the PPI sector has suffered a poor reputation at the hands of banks and building societies, but fewer than 1% of the unemployed receive an income via a PPI policy. Independent providers do not mis-sell or over-price their products and it’s vital people who have been put-off purchasing this cover, re-evaluate its benefits.”

In a bid to meet their regular daytime bills such as utilities, travel and food, many consumers are cutting back on their insurance, but Sara-Ann opines this is not always such a prudent measure. She continues: “It’s right to reassess your finances and re-consider levels of cover, but not to the extent that you leave yourself financially exposed to hardship. This is especially pertinent with PPI, given the swiping job cuts that are being made across all sectors in the UK.”

This week HSBC announced 1200 job losses, although unions suggest the figure’s more likely to top 3000. Sara-Ann concludes: “I fear the mortgage arrears and repossession figures – 46,750 in 2008, 68% more than the year before – will continue to rise before people appreciate PPI can put a halt to these frightening statistics. Which? says that 73% of mortgage holders believe the Government should do more to prevent repossessions – I counter this can be achieved by making PPI compulsory. Since consumers don’t appear to have the appetite to purchase it themselves, lenders should offer it for free with every mortgage offer.”

Standalone firm British Insurance has won an unrivalled number of awards for its products and service delivery – salvaging the reputation of a tarnished sector. It has a 100% customer retention rate, has never received a product or service complaint and offers policies for homeowners, those renting and people in shared ownership schemes. Premiums are £3.40 per £100 of benefit for unemployment cover and it’s widely acknowledged they are more competitive than credit providers – some four times cheaper for mortgage, five times for income and 10 times for loan protection.

As the level of Payment Protection Insurance complaints to the Financial Ombudsman Service continues to rise, PPI lobbyist Sara-Ann Burgess is calling upon the Financial Services Authority to ‘name and shame’ lenders that fail to investigate complaints properly.

The FOS predicts that by the end of its financial year next week it will have received 30,000 PPI complaints from consumers who were unable to get their mis-selling charges resolved. For the first nine months of the tax year, the FOS says 500 cases were coming in on a weekly basis, but after Christmas this soared to over 800 a week, which in its opinion is unacceptably high.

Such is the FOS’s concern over the number of complaints that should have been dealt with ‘in-house’ by lenders that its Board approached the regulator towards the end of last year advising FSA members were breaking Treating Customers Fairly guidelines and suggesting their actions were causing wider consumer detriment.

The FOS would like to see the leading banks and building societies, who account for more than 80% of policies sold, adopt more robust complaint- handling procedures, learn from the complaints they’re receiving and apply root-cause analysis to avoid further complaints of a similar nature occurring.

Sara-Ann comments: “At least 90% of PPI complaints, and in the case of one lender, 100% of complaints, are upheld by the Ombudsman. Rather than try and put things right for their customers, lenders are happy to resort to delaying tactics, knowing if they issue a complaint rejection letter, over half of the recipients will accept the findings at face value and not bother to pursue further via the FOS. Those who do have the resolve to take their complaint further find they were invariably right to do so.

“This means the real figure of those who have been mis-sold PPI could be far higher. It’s a double whammy – underhand tactics are used to mis-sell the cover in the first place and now those same tactics are employed to avoid recompensing people. Why isn’t the FSA reigning in its members more? Firms are legally required to update their processes to meet the regulator’s requirements and yet the FSA’s turning a blind eye to those who aren’t. Widespread consumer detriment cannot be allowed to continue – the regulator needs to name and shame the perpetrators and ensure they clean up their act.”

The FOS believes its 30,000 case load has now peaked and predicts cases will be around 20 – 25,000 for the next financial year. However, Sara-Ann counters that with the recent launch of the Which? online PPI complaints tool, thousands more will now find it easier to seek redress over the mis-selling of policies and suspects the 30,000 peak is the tip of the iceberg.

“This tool gives consumers greater confidence in making their initial complaint and once they realise their lenders’ complaints rejection is the norm and purely a staling tactic, it opens the floodgates for more cases to go to the FOS.”

Visitors to the Which? PPI website select a provider from a drop down menu, compete their contact and PPI details and explain why they believe their policy was mis-sold. The tool then creates an email which is sent directly to the provider, or a letter can be printed off and posted.

Sara-Ann concludes: “This tool will undoubtedly increase the number of complaints, so we need urgent action now to ensure lenders address their mis-selling issues and handle complaints responsibly at the outset. The onus should not be on the FOS to investigate thousands of PPI cases - credit providers must stop dragging their feet and abdicating their responsibility over complaints.”

This week’s shocking unemployment news and spiralling repossession figures should galvanise those without Payment Protection Insurance to take out a policy and ensure their mortgage and other monthly bills are paid in the event of redundancy says PPI lobbyist Sara-Ann Burgess from specialist firm Burgesses.

For the first time since 1997, unemployment has topped two million and there are predictions this will exceed 3 million within a year, resulting in one in 10 workers without jobs by 2010. By the end of 2008, repossessions soared by 68% to 46,750, including those forced into giving up their homes by ‘second charge’ consolidation loan companies.

Widespread redundancies and falling incomes contributed to repossessions and an increasing number of homeowners in arrears of three months of more. Last year around 377,000 households were behind with their payments, indicating the intense financial hardship being experienced across the UK.

Given the current dire economic climate and suggestions that things will worsen before they get better, Sara-Ann cannot understand why more people aren’t shoring up their finances and buying PPI. She comments: “We all know rising unemployment results in higher arrears and repossessions, yet very few people take the opportunity to break this cycle. Why face stress and hardship when you don’t have to? PPI pays the mortgage or rent for up to a year if redundancy occurs, ensuring unemployment will not equal arrears, repossession or being evicted by a landlord.”

Sara-Ann calculates less than 1% of unemployed people are currently drawing a monthly ‘salary’ courtesy of PPI – her figure is based on 19,105 PPI unemployment claims made up to November 2008, as a proportion of the 2.03m out of work. She suggests: “This is a scandalous statistic – so many more people could benefit from a monthly cash injection, courtesy of the insurance sector, but they’re ignoring this option.

“Those with financial commitments only need to siphon off a small percentage of the money they’ve saved due to the recent interest rate, VAT and utility bill cuts and they can enjoy peace of mind, secure in the knowledge there’s a safety net in place to pay bills should they lose an income.”

Sara-Ann continues: “There’s no hidden agenda, insurers will pay the claim, providing job cuts weren’t announced prior to or four months after the purchase of a policy. Very few are eligible for benefits from the State and despite the Government announcing a series of measures to help cash-strapped homeowners, they will have little effect on those in debt and do nothing to help people in rented accommodation.”

Payments made via Income Support for Mortgage Interest schemes (ISMI) have been brought forward so benefits are received after three instead of nine months and homeowners will soon be able to defer a proportion of their mortgage interest payments. However, Sara-Ann counters less than 2% of households on means tested benefits will qualify for ISMI and the holiday payment facility serves to only increase the mortgage debt, as interest will continue to be added to the outstanding loan.

She concludes: “The International Monetary Fund says the UK recession could last longer than any of the world’s major economies, so avoid building up further angst in the future and recession-proof your finances now. I appreciate the PPI sector has a poor reputation for over-pricing and mis-selling PPI, but independent providers are not guilty of this. They provide outstanding value, treat customers fairly and explain everything up-front.”

Standalone firm, British Insurance, has won numerous awards for its products, back to work assistance programme and service delivery and has policies for homeowners, those renting and people in shared ownership schemes. Premiums are calculated per £100 of benefit and standalone firm British Insurance charges £3.40 per £100 for unemployment cover. Anyone looking for a monthly replacement income of £500 would pay £17 a month.

“It’s easier to insure your tongue for millions than it is to make a Payment Protection Insurance claim if the firm you work for announced job cuts on or after the time of purchase,” warns PPI lobbyist Sara-Ann Burgess from specialist firm Burgesses.

Her comments follow news that Costa Coffee’s Italian Master of Coffee, Gennaro Pelliccia, insured his tongue for £10million. “This shows insurers will consider almost anything when it comes to providing cover,” she says, “but they will not be so accommodating to people who do not meet specific PPI policy conditions.”

PPI pays monthly cash benefits for up to a year if the claimant loses an income due to an accident, sickness or unemployment. However redundancy claims will be excluded from policyholders who were aware their employer was making job cuts before they took out cover or four months after purchase.

Sara-Ann explains: “People are often unaware of the four month clause - they mistakenly believe that as long as redundancies aren’t announced when they take out a policy or their job in particular wasn’t mentioned, they’ll be fine. But this isn’t the case – claims resulting from generic announcements made within a four month period after purchase will be declined as the insurer will rule the employee was at risk of redundancy and illegible to claim.”

Insurers do not automatically provide cover from policy inception, as is usual with other insurances, due to the escalating number of job losses and high value of claims payments against premiums. Sara-Ann continues: “A £17 monthly premium buys £500 worth of monthly payments if redundancy occurs. As this policy pays out for up to a year, the claimant could receive up to £6000 which is a pretty good return on a relatively low outlay. Insurers have to be cautious or it would not be in their interest to provide this cover.
They need premiums to fund payouts.”

Only recently, the Federation of Small Businesses predicted 120 businesses would go into administration every day in Q2 this year, further fuelling insurer’s resolve to reduce their exposure to widespread redundancy claims where possible. “People must act now and take out cover sooner rather than later,” urges
Sara-Ann. “If they wait until they think they’re at risk, they could find themselves uninsurable.”

Whilst calling for greater PPI awareness, Sara-Ann is concerned that a greater demand could lead to some providers mis-selling cover. She suggests: “Insurers are being responsible in making this cover available, but not all are selling it in a responsible manner. If they do not point out policy exclusions such as pre-existing medical conditions and redundancy clauses up front, then people could be paying for cover they will never be able to claim on.”

A view shared by the Financial Ombudsman Service who has witnessed a dramatic rise in mis-selling complaints. In 04/05 the FOS handled 836 PPI complaints by 07/08 this had soared to 10,652. The FOS predicted complaints would top 24,000 in 08/09, but by the end of December 2008, FOS Chief Executive Walter Derricks confirmed over 25,000 complaints had already been received and confirmed that the majority of them were from consumers who bought cover from High Street lenders. One of the most common complaints is consumers’ inability to claim on policies.

Sara-Ann concludes: “Choose an independent PPI provider who provides exclusion information up front and is less likely to inflate premiums to offset against any credit losses.”

Independent PPI provider, British Insurance, charges £3.40 per £100 for unemployment cover, £3.90 per £100 for accident, sickness and unemployment and £1.90 per £100 for accident and sickness. It offers policies for home owners, those renting and people in shared ownership schemes, has a 100% customer retention rate and has never received a product or service complaint.

Insurers and lenders must broaden their Payment Protection Insurance portfolio and offer policies for people involved in low-cost home ownership schemes says PPI lobbyist Sara-Ann Burgess from specialist firm, Burgesses.

Her call coincides with a recent announcement from the Mayor of London, Boris Johnson, who pledged to regenerate five estates in the capital and create 1500 new affordable homes. Tenants will pay subsidised rents for the first six months and then be given the option to buy their property at a discounted price.

Sara-Ann is concerned that very few PPI policies are available for people in low-cost home ownership agreements, despite them being on lower incomes and financially more vulnerable. She comments: “Because housing payments tend to be lower, there’s a belief that tenants do not need access to a policy that will pay their monthly commitment - whether rent or rent and mortgage – if they lose their job, become sick or have an accident. However, people in these schemes probably have less spare cash and any savings they would have relied on to carry them through hard times have no doubt gone to lenders who now require greater deposits.”

The Council of Mortgage Lenders confirms members require deposits as they believe borrows will have a greater commitment to the undertaking if they’ve put a stake in, at the beginning. “And this is why,” counters Sara-Ann, “that PPI is all the more necessary. Those paying more money up front will have less as a contingency fund so they should have access to low-cost PPI policies to ensure continuation of housing payments if their circumstances change.”

According to the Survey of English Housing just over 68% of the population are homeowners - five years ago this figure was 70%. Drivers behind this fall include; shortage of credit, falling house prices and a decline in secure long-term full-time employment. PPI pays benefits for up to a year if redundancy occurs, ensuring stability for both tenant and the Housing Association/developer. This is why Sara-Ann is calling for greater PPI support from lenders.

“The policy address the unemployment issue as it pays bills, relieving the financial pressure on tenants whilst they look for work, plus it reduces lenders’ liabilities as borrowers are less likely to default their payments. The CML says reforms are needed to encourage lender participation in these schemes, but I’d like to see PPI added to the reform agenda. The Government-backed Homes and Committee Agency says 20,000 people sign up to low-cost housing schemes every year - I wonder how many realise PPI is available to them?”

In August last year, independent PPI provider, British Insurance was first to launch a shared ownership scheme policy, meeting monthly mortgage and rental payments if a salary is lost.

With low-cost housing schemes set to escalate, Sara-Ann would like to see more insurers follow suit and become more socially responsible. She concludes: “I welcome the Mayor’s announcement that more housing will be made available to those on lower incomes, but let’s do the same with PPI. Whether housing costs are going on a mortgage, rent or a combination of the two, consumers need access to a financial safety net.

Insurers must adapt their policies and help everyone keep their homes in times of economic uncertainty.”

British Insurance charges £3.40 per £100 for unemployment cover, £3.90 for accident, sickness and unemployment protection and £1.90 per £100 for accident and sickness. A monthly premium of £17 would return PPI benefits of £500 a month (unemployment only option).

Landlord associations and mortgage firms are letting members and borrowers down by not giving them enough information on how to reduce their exposure to rental arrears says Payment Protection Insurance lobbyist Sara-Ann Burgess from specialist firm Burgesses.

Although landlords are continuously invited to buy into a range of services that assess tenants’ backgrounds or are given checklists of areas to scrutinise before handing over their keys, rental arrears and buy-to-let repossessions are increasing, indicating that no matter how many checks are undertaken, a tenant’s financial situation can change dramatically.

According to the Council of Mortgage Lenders, 26,800 buy-to-let mortgages were three months or more in arrears at the end of last year, up from 7,500 in 2007 – a rise of 73%. Landlord repossessions doubled in 2008, reaching 4000 - up from 2000 the previous year.

Sara-Ann believes only PPI provides rental stability and says third-parties have been remiss in not reminding landlords of its importance for them and their tenants. She comments: “PPI can make a difference to arrears and repossession figures and would certainly allay the fears of the 71% of National Landlord Association members who expect rent arrears to increase in 2009.

“Prospective and existing tenants who appear low-risk today, because they’re in employment, could lose their jobs in the next few months and fall into arrears. This is not scaremongering – it’s a reality. However if landlords ensure their tenants have PPI they will receive rental payments , direct to their accounts, for up to a year if a salary is lost because of accident, sickness or unemployment.”

Sara-Ann continues: “This could relieve the pressure on landlords who are becoming increasingly alarmed about a build up of rental arrears – 74% of the NLA’s 2500 monthly calls concern defaulting tenants and if rental payments are missed, this impacts on landlords’ mortgage repayments.”

Landlords can purchase rent guarantee cover, but it usually covers six months of missed rental payments, whereas as rental PPI pays out for up to a year. Sara-Ann concludes: “PPI is more socially responsible as it’s protecting the tenant as well as the landlord. No one wants to lose their family home and end up on the street because their circumstances change and PPI ensures this doesn’t happen.

“Both sides benefit – there’s peace of mind for the tenant, knowing payments will continue if a salary is lost and income stability for the landlord. I’m surprised more associations and mortgage firms aren’t advising landlords to encourage tenants to take out PPI and pointing them in the direction of independent providers who offer this cover.”

When standalone firm British Insurance launched rental PPI last September, it was welcomed by the NLA who said the product was long overdue and gave confidence to the rental sector.

The Policy covers up to £1500 per month rental payments or 50% gross monthly income and starts at £1.90 per month per £100 of monthly benefit. It offers back to day one payouts and one set premium rate, a choice of cover options and caters for people who voluntarily leave work to become carers for up to one year.

Claimants can take advantage of free back to work assistance with telephone advice, a ‘back to work’ guide offering practical help and guidance on job seeking, CV preparation and interview techniques, plus access to a daily updated job vacancy database highlighting opportunities that are not necessarily advertised on a wider scale.

Last week’s interest rate cut may well tempt those still in jobs to splash their spare cash on the latest registration cars, however they could unwittingly be exposing themselves to Payment Protection Insurance scams says PPI lobbyist Sara-Ann Burgess from specialist firm Burgesses.

Sara-Ann warns that motor dealers will be using the March 09 registrations as their ‘window of opportunity’ to make a sale and suggests that as consumers succumb to end of the month offers and finance deals, they will also be pressurised into taking out PPI to cover any loan repayment costs.

PPI pays a monthly benefit for up to a year to claimants who are unable to meet their ongoing financial commitments due to the loss of salary following an accident, sickness or unemployment.

She comments: “Dealers are increasingly desperate to boost their car sales and know if they’re left to organise the finance, then PPI will follow. With High Street lenders reducing their credit flows, people are turning to dealerships for loans. And this is when the pressurised PPI selling comes in, advisers either play on people’s insecurities, quote redundancy and suggest it’s vital customers purchase PPI before taking out a loan, infer PPI is a condition of the credit offer or hide its cost in the overall loan repayment figures. Not only is this unscrupulous, but the premiums are exorbitant - it’s well-known independent PPI providers are 10 x cheaper.”

Sara-Ann agrees that PPI provides a vital financial safety net for many during this current economic climate, but urges consumers not to take cover with their credit provider. She continues: “Dealerships can make vast profits on PPI so are keen to sell it, whatever their customers’ needs. This leads to inappropriate sales where people are unwittingly paying for cover they didn’t realise they had, are misled into believing a PPI purchase is mandatory or have policies they cannot claim on because the exclusions weren’t explained properly beforehand.

“Perhaps this is the reason the National Franchised Dealers Association was horrified when the Competition Commission in January announced a 14 day ban on credit providers selling PPI at the same time as the loan is taken out. It said the ban would leave buyers vulnerable and would not work as customers forget to purchase PPI – which in my view is rubbish. People are keen to save money whatever the product, so must shop around for alternative low-cost cover if they feel it’s suitable for their circumstances. Especially as dealers’ were recently fined for mis-selling PPI.”

In August last year, five motor retailers were fined £175,000 by the Financial Services Authority for exposing 2,175 customers to the risk of being sold unsuitable PPI policies.

The Finance and Leasing Association reports 53% of people buying cars through dealerships used their ‘in-house’ loan facility, up from 47% in 2007. “This means more people could be paying over the odds for, in many cases, worthless PPI,” Sara-Ann suggests.

According to the Society of Motor Manufacturers & Traders new car registrations fell to 2.1million in 2008, down from 2.4million in 2007 and this figure is expected to shrink by a firth by the end of the year. In February there were 54,359 registrations, 21.9% fewer than January’s 112,087. When registrations fell to 66,225 in August 08 it was then the lowest since 1966.

Sara-Ann concludes: “This indicates people are wary about taking on new financial commitments, but are they so wary when it comes to taking out PPI? We’re told it’s never been a better time to buy a car and I agree, it probably is; but check the accompanying loan conditions and APR and shop around for credit before making a commitment. Equally, do the same for PPI - request that the PPI cost is separated from the loan, ask for it to be priced per £100 of benefit and read through the terms and conditions and understand what the policy providers. This not only makes it easier to compare the cost and benefits to other providers, but could save thousands in the long run.

“Independent PPI providers do not make the same vast profits as those offering cover alongside the credit. They do not need to inflate their premiums to make up for any credit losses and leave purchasers to make their own decisions by explaining everything clearly up front.”

Standalone firm – British Insurance – charges £3.40 per £100 for unemployment cover and £3.90 for accident, sickness and unemployment protection and has won numerous awards for its policies and the way it treats customers.

The saying ‘it’s grim up north’ could be applied to the whole country if the debt survey findings from the Citizens Advice Bureau are anything to go by. CAB recently revealed a depressing snapshot of people’s finances in these recession-hit times and according to Payment Protection Insurance lobbyist Sara-Ann Burgess underlines the importance of having a policy that pays monthly debts should circumstances change.

Debt enquiries to Bureaux across the UK have doubled in the past 10 years and advisers are currently dealing with 7,241 new debt problems every working day. It is the number one issue, accounting for one in three of all calls. The average personal debt has crept up from £10,700 in 2001 to £16,971 in 2008 and CAB predicts it would take 93 years to pay off this sum if payments were staggered at a rate people could afford.

Feedback from more than 1400 people who contacted 52 Bureaux in July last year reveal over half were in arrears with mortgages, rent, council tax and fuel. The main reasons for indebtedness were; low income, over-commitment, illness or disability and job loss. “This is why,” suggests Sara-Ann “PPI has such a crucial role in helping people manage their finances at a time they need it most.

“Claimants receive a pre-agreed monthly sum to pay their bills if they’re sick, have an accident, have to leave work to care for a family member or are made redundant for up to a year. It never ceases to amaze me the bad press PPI gets when for many it delivers a financial lifeline.”

The ‘bad press’ as Sara-Ann puts it are a result of the irresponsible actions of High Street lenders who have not only allowed people to borrow beyond their means but continued to fleece customers by selling wholly-unsuitable and over-priced PPI policies. As a result, consumers have turned their back on a product that when properly sold, provides cash sums that far exceed the premium outlay and will help keep the bailiffs at bay and avoid repossession.

Sara-Ann is urging consumers to source cover from independent providers who do not behave irresponsibly and have customers’ best interests at heart, rather than their profit margins. She continues: “Independents do not have hidden agendas as staff are not under pressure to sell cover alongside the credit provision. It’s widely recognised that standalone firms offer premiums that are 10 times cheaper for loan protection, four times for mortgage and five times for income.”

One CAB client, a retired lady, was given a £16,000 bank loan which with interest and PPI premiums, totalled £25,660. The repayments alone were more than her pension and this was before other debts were taken into account.

“This is a classic case,” says Sara-Ann, “of the lender selling PPI through stealth. The customer’s circumstances and her ability to pay the loan and PPI premiums were not considered - I suspect the lady was unaware that PPI was added onto the cost of the loan. This ruthless manoeuvre has now been outlawed by the Competition Commission and the Financial Services Authority.”

Payment Protection policies are not only available for people with mortgages, credit cards and loans – they can also be purchased by those renting and in social housing agreements. Given more than two thirds of CAB respondents were renting their homes either privately or via local authorities and housing associations, Sara-Ann believes millions are missing out on support mechanisms to pay bills because they don’t realise PPI is available to them.

She comments: “Not everyone appreciates providers have broadened their cover criteria to ensure rental payments are protected if redundancy, accident or sickness occurs and the usual monthly salary is lost. Independent players such as British Insurance launched such a policy last year – a move that was applauded by housing groups and landlord associations.

“Equally, people are unaware that if they have to leave their job to care for a family member, their bills would be paid if they had a British Insurance PPI policy. I believe this cover would reduce the level of debt incurred by some CAB respondents and it’s heartbreaking to hear accounts where people have given up work temporarily to become carers and suffered financially as a result.”

PPI premiums are calculated per £100 of benefit. British Insurance, charges £3.40 per £100 for unemployment cover, £3.90 for accident, sickness and unemployment and £1.90 for accident and sickness. A person looking for a monthly replacement income of £500 would pay £17 a month.

Sara-Ann concludes: “Whilst I appreciate that PPI cannot solve all the debt problems, it could stop many households bills from building up and will give people breathing space during stressful times. Put simply, it could ensure life isn’t quite so grim.”