PPI – complain now, even if you have been rejected!

In August 2017, the FCA launched a PPI advertising campaign, with an Arnold Schwarzenegger head telling you to make a decision about claiming PPI, because a deadline is being introduced in August 2019.

This campaign is resulting in more people making complaints. In April 2018 the FCA published its complaints data for the banks and other firms it regulates and these show that:

Complaints about PPI rose by 40% to 1.55 million, the highest level of complaints about PPI for more than four years.

In January 2018 firms paid out £415.8m in redress to customers who complained about payment protection insurance (PPI). This … takes the amount paid since January 2011 to £30bn. 

You MUST complain before 29th August 2019

Two years may sound a long way off and you may be busy at the moment, but the FCA advert is spot on – don’t delay in getting your complaint in!

A lot of people will wait until 2019 and then there may be very long delays in complaint handling – so beat the rush.

The “old” reasons to complain

PPI may have been mis-sold even if you wanted it

You may have agreed to the PPI when you took out the loan or credit card, but it still may have been mis-sold if the details and exclusions weren’t explained to you properly. A few examples:

• most PPI policies had exclusion clauses for prior medical conditions – you should have been asked if you had any;
• PPI was sold to the self-employed or people who weren’t working who could never have claimed on it, or to people who had good sickness and redundancy pay provision from their employer who had no need of it;
• many policies attached to loans were single premium polices, where the charge was all up front, so you paid interest throughout the ten-year loan say, but it was often not explained that the insurance only covered the first five years;
• the salesman may have said incorrectly you could only get the loan if you took the PPI, or that the interest rate would be higher if you didn’t.

There is a full check-list of potential mis-selling reasons in the MSE Guide. These policies were extremely profitable for the lenders because their cost was high and claims on the insurance were often unsuccessful. Because of this, salesmen who knew little or nothing about insurance were often incentivised to push the policies without making proper checks that they were suitable.

You may have had PPI and not realised it

PPI wasn’t only sold with credit cards and loans by banks. You could have had PPI with a mortgage or secured loan, with finance plans for buying a car or furniture, catalogues or store cards.

Before 2007 it was common for the “Yes I agree to PPI” box to be ticked by default if you applied for, say, a credit card on-line. Or if you were applying in shop for a store card or for finance on a sofa, the sales assistant was often told to routinely tick the PPI box.

PPI also went under a wide variety of names, such as “income protection” , “loan care”, “ASU  cover(Accident, Sickness and Unemployment)”.

The end result is that if you have borrowed money in the past it is very possible that you were being charged for PPI that you didn’t realise you had.

This was most common with loans, where you just make the same payment and so don’t get a breakdown each month of the amount, but I’ve seen plenty of clients at CAB who were surprised when I pointed to the line on their credit card statement that showed the PPI amount.

You can claim PPI mis-selling even if the account is closed or in default

You may have paid off the loan, canceled the PPI on a credit card when you realised you were being charged it or closed the account. If you have had financial difficulties, you may have a payment arrangement. The account may have been defaulted or sold on to a debt collection agency.

None of these make a difference – if you were mis-sold the PPI (see above) then you can still go to the original lender and claim it back.

The lender may not exist any more, but you can still reclaim, either from a bank that bought a portfolio from the lender – for example Barclays bought Egg’s credit card business – or from the Financial Services Compensation Scheme if the lender has gone bust.

A new reason to complain  “Plevin complaints” about “high undisclosed commission”

There is a new type of PPI complaint. Now you don’t always have to prove that the PPI was mis-sold, anyone that paid more than 50% commission will now be able to get refund of some of their PPI payments if the account with PPI was in operation after 2008.

These complaints are sometimes called “Plevin complaints” after a court case where Susan Plevin sued Paragon Finance Ltd when she found out that more that 70% of her PPI payments had gone in commission. In 2014, the Supreme Court agreed with her, saying

Any reasonable person in her position who was told that more than two thirds of the premium was going to intermediaries, would be bound to question whether the insurance represented value for money, and whether it was a sensible transaction to enter into. The fact that she was left in ignorance in my opinion made the relationship unfair.

The FCA has decided that if you paid over 50% commission, you can get a refund of the difference between what you paid and 50%.

I think this is a poor decision by the FCA as 50% commission is pretty outrageous. The limit should have set at something like 30%. But the decision has been made and the 50% level will still see many people getting significant refunds. See one of the comments below this article where a reader reported:

I have had a credit card PPI claim against MBNA rejected in March this year. Today I got my ‘Plevin’ letter and they are paying me around £9k as a result.

Who should make this new sort of complaint?

Of course, you don’t know what commission was paid… but as the typical amount was 67% it is very likely that you paid over 50%. When you put in a complaint, your lender will have to tell you what the amount was.

These Plevin / high undisclosed commission complaints can be made even if you have a had a previous PPI mis-selling complaint rejected.  You can also complain even where you wanted the PPI and could have claimed on it, so there are no other reasons for mis-selling at all.

If you read the comments below this article, you will see that some people are getting good payouts from Plevin complaints. The Ombudsman’s annual review for 2017/18 says that they resolve 118,000 c=PPI complaints in the last year that were affected by the plevin decision.

You don’t have to say which sort of complaint you are making

This new type of complaint may seem confusing – how can you decide if you should make a “normal” PPI complaint or a “Plevin” complaint?

The good news is that you don’t have to decide this.

If you put in a normal PPI complaint (see below for how to do this – it’s easy!) and the lender rejects it, the lender then has to decide if you should get a “Plevin” refund, even if you didn’t mention this.

So you now have two chances of getting a PPI refund.

Complain again if you have already been rejected

If you have put in a complaint about PPI mis-selling and had it rejected you should now complain again, because you could be eligible for a Plevin payout.

This is very easy – just send a letter or an email saying something like:

A few years ago (give the date or year if you remember it) you rejected my complaint about PPI. I would like you to look again at my complaint.

Making a PPI complaint is now very simple

MSE has a great PPI complaint guide covering how to do this with template letters to use. You can do this even if you don’t have the paperwork about your loans/credit cards. And even if you don’t know the account number.

In the MSE Guide is a link to the Resolver system. This is a free system that makes complaining even easier as it takes you through the process saying what has to happen at each stage.

Don’t use a claims firm – they write the same standard letters that the MSE guide has. They don’t have any clever tricks or special words that mean a complaint through them is more likely to succeed or will get you a larger payout. The Financial Ombudsman’s statistics show that individuals complaining succeed just as often as those using a claims company.

A summary of when it is worth claiming PPI on an old debt

1. Debt repaid in full – YES
2. Debt still owed which isn’t statute barred – PROBABLY but the refund may be used to repay some of the balance.
3. Debt still owed which is statute barred – PROBABLY NOT unless refund could be larger than the balance or you want to pay the debt. See this article about one reader’s situation.
4. Debt that was partially settled – POSSIBLY NOT unless the refund would be larger than what was written off in which case YES. Even though part of the debt was “written off” it still legally exists and the PPI refund may be used to settle it.
5. Debt taken out before bankruptcy, IVA or DRO – these are complicated, see PPI and Insolvency for details.

For all of the cases 2-5 it’s important you don’t use a claims firm. Otherwise the refund may be used to reduce your debt and you will still owe the claims firm their fees but not have any cash to pay them. So don’t ever use a claims firm for these cases!

This article is kept updated with the latest PPI news.

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