EU CONSUMER PROTECTION ISSUES REGARDING PAYMENT PROTECTION INSURANCE

Taking as a base the historical origins and sources of payment protection insurance (PPI) policy as a specific contractual clause included in credit agreements, the authors analyse the role of the insurance provider in the protection of property and personal income of the credit negotiator upon the emergence of certain risks (accident, sickness and unemployment) which cause insolvency, i.e. inability to repay credit. Stressing the importance of obtaining the PPI cover which, for a certain period, provides to the credit negotiator protection in a situation when the payment of credit is impossible, the authors draw attention to the relevance of this topic while underlining the open legal issues of misselling of that financial product and its effects (financial mis-selling) and obtaining the abovementioned insurance cover for credit negotiators who have ended up with financial product which is not in their interests. While as much as 40% of consumers were unaware that they had an insurance policy, their trust in financial institutions was permanently undermined. Since PPI mis-selling practices are a key concern for consumers, an important part of financial market, an increasing number of claims against mis-selling of PPI policies (a claim to the bank, lender or broker who sold the PPI policy) highlighted the need to change the unfair terms in PPI policy and define the legal and insurance status of that financial product. To this end, the authors analyse the provisions of the judgement of the Court of Great Britain, Royal Courts of Justice in Case CO/10619/2010 from April 20, 2011 and the consequences of its implementation, i.e. the duty of banks and other financial institutions to compensate the damage caused to consumers by the financial mis-sold PPI. In addition, the authors examine the fairness of a PPI policy under EU consumer law according to the latest provisions of the European Court of Justice (ECJ) in Case C-96/14.