Banks and credit cards have paid out over £16 billion so far to people who were mis-sold Payment Protection Insurance (PPI) . You may have been cold-called or got texts from companies offering to reclaim your PPI. You might not have thought you could qualify, perhaps because you don’t remember any PPI or because you don’t see why you should get a refund. Here are five reasons to think again!
UPDATE August 2016 – a time limit on PPI claims is going to be introduced, probably June 2019. This may sound a long way away, but the sooner you make your complaint the better. Complaining about old PPI is harder because there can be less documentation to prove what you paid. And the claims handling may get really slow when the end of the deadline approaches if a lot of people wait until the end!
(NB if you have been bankrupt, in an IVA or a DRO then there are some special factors you need to know about before making any claim for mis-sold PPI, these are explained here.)
1) It’s easy to try!
This is number one because worrying about this puts many people off, especially if they aren’t sure they qualify for a refund at all. You may have heard of court cases and people going to the Financial Ombudsman and think this sounds too difficult and stressful. It used to be complicated for the early pioneers, but it isn’t any longer because the banks and other lenders have been made to set up simple reclaim systems by their regulator. In March 2015, Barclays announced their average PPI payout was £1740 and 79% of claims were upheld.
Additionally Martin Lewis’s MoneySavingExpert site has a brilliant free guide to PPI reclaiming. It starts off answering all the questions you may have, has template letters you can use and looks at how to check you are offered the right amount of compensation. It also has a very active forum, where you can see how other readers are doing and post yourself, anonymously, if you want to ask something about your own reclaim. If you are already convinced, you could just go over there now and not read the rest of this page :)
2) PPI may have been mis-sold even if you wanted it
You may have agreed to the PPI when you took out the loan, 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.
3) 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.
4) 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. The debt may even have been so old that it is now statute barred – you can still reclaim PPI on it and doing this will not change the statute-barred status. 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.
5) You don’t need to have the account paperwork
If the account was closed less than six years ago, it will still be on your credit record, so you can find the details from Experian etc. If it was closed longer ago, you can ask the bank if they still have the details and many successful reclaims are being made in these circumstances. There are full details in the MSE guide.
“What claim firm would you recommend?”
None of them. Some are cheaper than others. I expect some are better and quicker than others. But anyone who is capable of reading this article will be able to make their own reclaims! The advantage of doing it yourself is that you could save hundreds or even thousands of pounds in fees that the claim firm takes, and the only cost to you is making a few phone calls or writing a few letters.
Even the regulator is at last accepting that it has to act to reduce claims firms fees, saying: “It is important that consumers who decide to use a CMC to pursue a financial claim, receive better value for money and are not taken advantage of by companies that may add very little to the claims process in practice. ” But if the regulator’s proposed fees cap is approved (and that isn’t definite yet) it will only apply to new claims, not a claim that you begin now.
There can also be a huge disadvantage in addition to the cost of using a claim firm. If you are claiming PPI on any accounts which are still open or which have been defaulted, the lender may decide to pay any PPI refund you are entitled to into the account, so reducing the amount you owe on the account. The problem here is that the claim firm still has to be paid their percentage but you haven’t received any money…
If you are still unsure, read that MSE Guide. Did I mention that it was good?