Payment protection insurance
In 2012, the Irish central bank announced that it was investigating six lenders about the mis-selling of payment protection insurance policies. Payment protection insurance is meant to cover loan repayments on car loans, credit card debt, or mortgage payments if a person becomes ill and cannot work, loses their job or has a serious illness. However, as many as one in five of those who took out these products since 2007 in Ireland was likely to have been a victim of mis-selling.
Banks were found to have sold payment protection insurance policies to people, including the self-employed, who would never have been able to make a claim under the terms of the insurance policy. The policies should not have been sold to categories of customers such as those under 18 or over 65, people who work less than 16 hours a week, the self-employed or unemployed, or those with pre-existing medical conditions or people on non-permanent contracts.
AIB, Bank of Ireland, Ulster Bank, Permanent TSB, EBS and GE Money all sold these policies and another half-dozen finance firms were told by regulators to check if they also mis-sold the insurance product. The total cost related to resolving the scandal was expected to cost these firms up to €600m when all expenses, such as the investigation and administration, are considered. Customers who were mis-sold insurance were able to get refunds, but the taxpayer had to cover much of the cost, leading the Irish Central Bank to consider legal action against some firms that it felt broke the rules when selling protection insurance.