As many as 2 million people have been paying premiums on payment protection insurance they don't need, can't use and may not even realise they have.
According to consumer watchdog Which?, as many as a third of policyholders who have taken out cover in the last five years may fall foul of at least one significant exclusion of the policy.
For example, people who are self-employed or on a fixed-term job contract often aren't covered by PPI.
Many people aged 65 and over, or people who might claim for absences relating to pre-existing medical conditions also may not be covered.
If you’ve ever taken out a loan, mortgage, credit card or store card, or bought something on credit, then the chances are you were sold payment protection insurance (PPI) at the same time.
PPI is designed to cover your debt repayments if you can’t work through illness or accident, or if you are made redundant. However, all too often it is mis-sold, costing consumers thousands of pounds for expensive insurance they may never be able to claim on.
The consumer organisation is calling on consumers to check their policies and make a complaint if they discover they may have been mis-sold the product.
Doug Taylor, Which? personal finance campaigner, says: “We've always known that people were being mis-sold PPI, but we were still amazed to discover the scale of it. It appears that salespeople are chasing their commissions, their bosses are chasing profits - where's the sense of responsibility to the customer? Action is needed sooner rather than later to clean up the sale of PPI so that consumers truly understand the product they are buying or can opt out and take a product that actually provides them with real financial protection.”
Income protection insurance: News update: June 2008