Financial firm rapped by advertising watchdog over PPI claims

A financial firm specialising in the recovery of mis-sold payment protection insurance has had its wrists slapped by the advertising industry watchdog.

Premier Financial Recoveries, of Wimborne, Dorset, sent out an email which made various claims about its “easy” reclaim service.

It said that the average reclaim was £2,348 and that 89% of mis-sold PPI claims are paid out. It went on: “The Financial Ombudsman, Financial Services Authority and Citizens Advice Bureau believe that millions of these policies have been mis-sold. If you took out any kind of a loan or mortgage in the last six years, it’s 70% likely you have paid Payment Protection Insurance.”

The email included CAB and FSA logos.

But Lloyds TSB Bank complained to the Advertising Standards Authority. It challenged both the use of the logos and the statement that there was a 70% likelihood of borrowers having paid for PPI.

Premier Financial acknowledged that the use of the FSA and CAB logos could be seen as implying that the two organisations endorsed its service, and agreed to remove the logos from its advertising.

But the firm felt it could back up its statement about the likelihood of borrowers having taken out PPI. It submitted a copy of an FSA review on PPI to substantiate the claim.

The November 2005 review said that “in a few firms” there was a 70%-plus rate of customers who had been sold PPI which “caused concern because it seemed unlikely that such high percentages of customers could realistically claim for benefits under all sections of the policy”.

The firm also submitted an extract from the CAB website which said: “Selling PPI is big business, with an estimated 20 million policies in force and annual gross premiums in excess of £5 billion.”

But the Advertising Standards Authority said that although the FSA found PPI penetration rates above 70% in some of the firms it visited, the study had involved just 30 firms selling PPI outside the prime mortgage sector. The Authority also said that because the FSA report was produced in 2005, the figures were five years old. It ruled that the FSA report did not substantiate the claim.

Premier Financial Recoveries has been told not to use this form of advertisement again.