R05 Payment protection insurance: free practice questions

1. Question 1 of 5

   With what type of borrowing has payment protection insurance traditionally been sold?

   Option A: Only student loans issued by the governmentOption B: Only residential mortgages secured on the borrower's main homeOption C: Only commercial loans taken out by limited companiesOption D: Non-mortgage credit such as loans, store cards and credit cards

   Show answer

   The answer is D: Non-mortgage credit such as loans, store cards and credit cards

   PPI is similar to MPPI in structure but has been sold with non-mortgage credit such as car loans, other loans, store cards and credit cards.

   Why the other options are wrong

   A

   Government student loans weren't sold with PPI.

   B

   PPI sold with mortgages is MPPI; PPI mainly covers other credit.

   C

   PPI wasn't limited to company loans.

2. Question 2 of 5

   Under PPI sold with credit or store cards, what level of cover was usually provided?

   Option A: The minimum monthly payments, often for a fixed period such as a yearOption B: Double the minimum monthly payment for up to five yearsOption C: A lifetime incomeOption D: The full outstanding balance on the card on diagnosis of a serious illness

   Show answer

   The answer is A: The minimum monthly payments, often for a fixed period such as a year

   Card PPI usually covered only the minimum payments on the card, often for a fixed period of about twelve months.

   Why the other options are wrong

   B

   Double the minimum payment for five years isn't how card PPI worked.

   C

   Card PPI didn't pay a lifetime income.

   D

   Card PPI didn't clear the full balance on illness.

3. Question 3 of 5

   Which of the following was NOT a key finding of the Citizens Advice Bureau's 2005 report into PPI?

   Option A: Claims were paid more generously than on any other productOption B: Sweeping exclusions such as mental health or back conditionsOption C: High pressure and inappropriate salesOption D: Significant cost adding to customer debt

   Show answer

   The answer is A: Claims were paid more generously than on any other product

   The report found high costs, poor product design with sweeping exclusions, inappropriate high pressure sales, and bureaucratic claims handling with a disproportionate number of failed claims.

   Why the other options are wrong

   B

   Sweeping exclusions, such as mental health or back conditions, were a key finding.

   C

   High pressure and inappropriate sales were a key finding.

   D

   Significant cost adding to customer debt was a key finding.

4. Question 4 of 5

   What was the FCA's final deadline for making a new PPI mis-selling complaint?

   Option A: 6 April 2012Option B: 1 January 2021Option C: 31 December 2015Option D: 29 August 2019

   Show answer

   The answer is D: 29 August 2019

   To draw a line under PPI compensation claims, the FCA set 29 August 2019 as the final deadline for new complaints.

   Why the other options are wrong

   A

   6 April 2012 is when point-of-sale restrictions began, not the complaint deadline.

   B

   1 January 2021 is after the deadline.

   C

   31 December 2015 isn't the deadline.

5. Question 5 of 5

   A bank arranges a personal loan for Bea today. Under rules in force since 6 April 2012, when could it normally sell her PPI?

   Option A: Never, as all sales of PPI are now completely bannedOption B: Immediately, at the same appointment at which the loan is arrangedOption C: Only once 90 days have passed since the loan was first taken outOption D: Not until seven days after the loan or a personal illustration, if later

   Show answer

   The answer is D: Not until seven days after the loan or a personal illustration, if later

   Since April 2012, PPI generally cannot be sold until the later of seven days after the loan sale or the provision of a personalised illustration. PPI is still available as a stand-alone product.

   Why the other options are wrong

   A

   PPI isn't completely banned; it's still available, including as a stand-alone product.

   B

   PPI can't be sold at the same appointment as the loan.

   C

   There's no 90-day rule; it's the later of seven days or a personalised illustration.

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