An overzealous salesperson told our member that payment protection insurance was compulsory.
She was told by the salesperson that because she worked part time and her income was based on commission, it was compulsory to add payment protection insurance (PPI). This would cost her an extra $49.16.
Our member had used Smiths City's easy-pay before without the need for PPI, so she queried the change in policy. She was told that it had been brought in because of the number of customers having financial problems after the Christchurch earthquakes.
She agreed to take out the insurance but continued to wonder about this change. So she got in touch with us to find out if it applied to Christchurch only or was nationwide. It's just as well she did. Ten minutes after we emailed the company, Noel McDonald (Smith City’s General Manager of Finance) rang us.
PPI not compulsory
Our member's story concerned Mr McDonald because PPI is not compulsory at Smiths City in Christchurch or any of its stores for that matter. The only insurance that's compulsory on a Smiths City credit contract is to protect the goods until they’re paid for (and the company offers this type of insurance). Where customers have household insurance that adequately covers the goods, sales staff are encouraged to offer PPI to customers in case they want to cover their payments – but it's not compulsory.
Mr McDonald thought the salesperson was just being "overzealous". But he added that a reminder email about the company’s PPI policy would be sent to all sales staff and he’d also speak to senior management and the manager of the Christchurch store about the incident.
He also apologised to our member and said she’d be given a refund of the insurance charge if she didn’t want the policy.
“Mis-selling” of PPI on loans and credit contracts has become an industry in the UK – so much so that claims-management companies help people reclaim their money (for a fee). However, the UK consumer organisation Which? says that PPI complaints are usually straightforward and can easily be handled by consumers themselves.
We’re a long way from what happens in the UK – and so we’re pleased Smiths City dealt with the problem promptly and refunded our member's money.