Customers are claiming back money spent on loans insurance, following a critical ruling from the Competition Commission.
Many people are reclaiming money from loans firms who sold them payment protection insurance (PPI), the Times reports.
This "revolution" in consumer action follows a verdict last week from the Competition Commission, which ruled that the loans cover was being overcharged for by providers by around £1.4 billion per year. It was also found that many firms added PPI to loans repayments automatically, with many customers unaware that they were paying the extra premiums.
The loans insurance works by covering repayments missed due to a sudden change in the borrower's life circumstances, such as being made redundant. However, evidence has emerged that around 20 per cent of claims on the insurance are rejected due to consumers falling outside of providers' criteria.
Talking to the newspaper, consumer campaigner Martin Lewis commented: "This really is a scandal and I would urge anyone who has got a loan in the past six years to check whether they’ve been miss-sold a policy. This is set to be a bigger revolution than bank charges or credit card fees."
He added: "In one case we have seen, a borrower paid £24,500 for cover on a £100,000 second-charge home loan over 18 months. They got the entire amount back plus interest."
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