There's no time limit on how far back you can make a PPI claim on Overdrafts.
Payment Protection Insurance or PPI has been recognised as being vastly mis-sold over the last 20 years or so on loans, credit cards, mortgages and other credit-based products. Those responsible for the mis-selling are banks, lenders and other finance providers but they also include third party brokers.With PPI mis-selling being so prevalent across the finance sector, it is of little surprise that banks and lenders attached PPI to overdrafts too.
MILLIONS OF CONSUMERS HAD PPI attached To Their Overdraft Facility by LENDERS, Mostly between 1980 and 2010, SOME AS FAR BACK AS 1970.
However not all banks and lenders will have done this, therefore overdraft PPI is not as common as credit card and loan PPI. If you’ve had or have an overdraft facility it is worth checking to see if you were sold overdraft PPI or if it was added on to your overdraft.
What Is Overdraft PPI?
Many banks and lenders sold and added on Payment Protection Insurance (PPI) to customers who took out an overdraft facility. The policy was meant to act as a safety net to protect you from falling into arrears if you ever stopped working because of sickness, an accident or if you became unemployed.
Types of Overdrafts PPI was sold on
There are two specific types of accounts that overdraft PPI was mis-sold on:
- Personal bank account overdrafts
- Business bank account overdrafts
Which Bank and Lender Overdrafts Was PPI Sold On?
The list below is of some of the main banks and lenders that sold PPI or added PPI onto personal overdrafts or business overdrafts (this is not a complete list of all banks and lenders):
- Barclays Bank sold overdraft PPI
- The Co-operative Bank
- Lloyds Bank (known as Personal Overdraft Protection or POP & Business Commercial Overdraft Payment Protection or CORI)
- Royal Bank of Scotland (RBS) have sold PPI
- NatWest Bank sold overdraft PPI to business and private consumers
- Smile (Owned by The Co operative Bank)
- Bank of Scotland (known as Overdraft Repayment Cover or ORP)
- Santander is now responsible for Alliance & Leicester (known as Overdraft Payment Protection or OPP)
What are the costs and charges of Overdraft PPI?
Charges for an overdraft facility are added to the bank account that the overdraft is attached to, monthly, weekly or daily.
Having and using an overdraft is expensive, with costs that can mount up to considerable sums. The reason they are expensive are because of the type of overdraft (authorised and unauthorised) and way the charges are calculated.
The following is an example of what a monthly overdraft PPI charge can be:
- Overdraft PPI premiums are worked out as a percentage of the outstanding monthly overdraft balance. A typical charge is 79p for PPI on every £100 of outstanding debt on the overdraft.
- The lender then adds interest on top of the monthly PPI premiums so increasing the cost of the PPI.
- If payments are missed, charges may be added to the overdraft account. If there is PPI on the overdraft, the charges will be higher, leaving you with a larger debt, than if there was no PPI on the account.
Anyone with an overdraft who was unaware they had overdraft PPI added to or was mis-sold overdraft PPI may be paying extra, unnecessary fees and charges. This is especially so if any payments were missed or the overdraft account hasn’t been kept up to date. This could result in the borrower incurring a larger debt and financial hardship.
How Overdraft PPI was mis-sold?
Overdraft PPI is part of the wider mis-selling of PPI to millions of people.
Banks and lenders mis-sold overdraft PPI on a huge scale. Overdraft PPI was often mis-sold and added to an overdraft facility where the proper or correct information was not provided by the seller at the point of sale.
Borrowers found that PPI had been sold or added to an overdraft in the following ways:
- without any PPI eligibility checks being done
- no checks to see if the PPI was suitable
- without consent or knowledge; or
- if the PPI was wanted or required.
Common grounds for mis-sold Overdraft PPI:
Many PPI policy providers realised how lucrative payment protection insurance was, which led to banks and lenders pushing the product on their customers. This is then what contributed to PPI being mis-sold.
- When discussing your overdraft, did you feel pressurised into buying PPI?
- When taking out PPI the bank or lender should have made sure you were happy with the deal, instead of having it forced on you. If any pressure was placed on you to take out a policy you didn't require, you may have been mis-sold loan PPI.
- Were you aware that your bank or lender had added the PPI insurance to your overdraft?
- If you had no idea you had it, you may have been mis-sold.
- At the time you were sold the PPI, were you unemployed, self-employed, retired or a student?
- If so, you may never have been able to claim on the policy, so it could have been mis-sold.
- Did the bank or lender check if your employer provides full sick pay?
- If no checks were done and you are entitled to full sick pay, your loan payments would have been covered rendering the loan PPI unnecessary.
- Overdraft PPI is an optional product so not compulsory, did your bank or lender make this clear?
- If you were told it was required in order to secure the overdraft, or you felt pressured in any way to taking out the PPI, you might have been mis-sold.
- Were you informed by your bank or lender about any exclusions?
- For example, if you had any pre-existing medical conditions or you were registered disabled at the start of the policy, the cover may have been voided, therefore you could be classed as being mis-sold.
- Were any checks done to determine if you had any similar or existing PPI policies?
- If not, you may already have been fully covered, so were mis-sold if your bank or lender failed to check.
- Were the terms and conditions of the PPI and costs explained to you at the time of buying the policy?
- If they were not explained to you and you were unaware of the possibility of extra costs and/or cancellation fees, then you could have been mis-sold
- Did your bank or lender check if you were age-barred from qualifying for the PPI?
- Many PPI policies were sold to people who were already retired for example or would be retired during the life of the PPI policy. If this happened to you, you were mis-sold.
- Were you told about your right to refuse overdraft PPI?
- If you were not told by your bank or lender that you had the right to refuse the PPI cover being offered, this could be classed as a ground for mis-selling.
How Did the Mis-sold PPI Scandal Break?
The last couple of decades saw many people being sold PPI cover.
The sale of PPI policies meant financial institutions were netting billions of pounds each year but paying out very little. It became apparent that many of those who had PPI would not be covered by it if they ever needed to claim.
This went on for years until the Citizens Advice Bureaux (CABx) looked further into why out of all the policies sold, so little was paid out.
A report was published by the CABx in 2015. They concluded that PPI was in effect a ‘protection racket’ and they lodged a ‘super complaint’ with the Office of Fair Trading. The report highlighted that only 15% of consumers who took out the expensive PPI policy would be successful in making a claim if the need arose.
At the same time the then UK regulator, the Financial Services Authority (FSA) launched their own investigation. The FSA found poor PPI selling practices and very little compliance control. What could not be predicted at that time was the scale of the mis-selling, how it would be exposed, and the sums of money involved.
In addition to the CABx other organisations have also been campaigning to highlight the PPI scandal and for consumers to be treated fairly. The organisations include: Money Saving Expert, Martin Lewis, the Money Advice Service and Which?
What If I Can’t Remember Who the Lender name, Will I Still Be Able Reclaim Overdraft PPI ?
Due to the timescales involved it is not always possible to remember every bank or lender you’ve had overdrafts, mortgages, store cards, credit cards, loans etc with.
This is not a problem. Necessary checks carried out with banks or lenders you’ve had dealings with may reveal if PPI had been added to any finance product. If the check reveals you had PPI you may have grounds to reclaim mis-sold PPI charges.
If by chance you do have any old documents or agreements, it may be worth checking them to see if there is any mention of PPI charges on them. Bear in mind that PPI can be also be listed as:
- Loan care;
- Payment cover;
- Protection plan;
- Loan protection.
How Much Overdraft PPI Can I Claim?
A successful overdraft PPI claim should result in the bank or lender concerned repaying the amount paid in monthly PPI charges with interest. The financial institution should also repay any additional losses you incurred such as any missed payment and/or arrears charges that may have affected the amount of PPI charged.
The amount of overdraft PPI compensation will include statutory interest (at 8%) backdated to the start of the agreement to the point of the claim. The reason for the statutory interest is compensation for you being deprived of the money because the bank or lender sold you PPI that wasn’t suitable for your circumstances.
Undisclosed High Commission on Overdraft PPI
High-levels of commission is when you’ve paid more than half of what you’ve paid for the PPI policy.
The Plevin rule was introduced by the FCA in March 2017 after a Supreme Court ruling. The judge in the case of Plevin v Paragon Personal Finance March 2017, outlined how PPI commission complaints are to be dealt with.
The rule states high commission is if the commission paid is over 50% of the price of the PPI, the claimant is entitled to the difference back plus interest.
Because of the Plevin ruling, you can complain about the level of commission you’ve paid, that was not previously disclosed when the policy was sold. If the commission was high you may be entitled to compensation regardless of if you were mis-sold the PPI or not.
Since Plevin, another case of Doran v Paragon Personal Finance June 2018, was decided by a District Judge in a County Court. The claimants were awarded all their high commission payments back plus interest.
The case of Doran does not set a precedent, like the Plevin case does, as it was decided in a lower court and may yet be appealed by Paragon Personal Finance.
If you’ve successfully claimed for mis-selling, you cannot later claim again under the Plevin rules. This will still be the case after the recent Doran decision. Banks and lenders will only consider claims for undisclosed commission if you’re mis-selling claim has previously been rejected.
You may be entitled to compensation, if you feel that you have paid high commission for a PPI policy, read more about PPI High Commission claims.
How Long Do I Have to Claim PPI?
The Financial Conduct Authority (FCA) has set a deadline of 29 August 2019, by which time all PPI complaints will need to have been submitted. After this date, customers will lose the right to have their complaint assessed by us, or the Financial Ombudsman Service.
Here's What You Need To Do
The FCA and Overdraft PPI Complaints
The UK financial services sector is regulated by the FCA. Their role is to ensure that customers are protected, while keeping the industry stable and to promote healthy competition between financial service providers. This includes most banks & building societies, credit card & mortgage companies.
The FCA took over the role from its predecessor, the Financial Services Authority (FSA) in 2013.
While the FCA is there to protect consumers, their remit doesn’t include investigating individual overdraft PPI complaints. To make a complaint contact the relevant bank or lender first. If you are unhappy with their response, or your claim is rejected you may approach the Financial Ombudsman Service (FOS).
The Financial Ombudsman Service and Overdraft PPI Complaints
The Financial Ombudsman Service (FOS) was set up in the year 2000. Their function is to resolve disputes between consumers and financial service providers in the UK. This includes banks, building societies, insurance and finance companies as well as financial advisers and investment companies.
If you have an overdraft PPI complaint and are unhappy with the way your bank or lender have dealt with it or if its been rejected, you can ask the FOS to review the matter. You must allow your bank or lender 8 weeks in which to respond to your claim.
Should the final response from your bank or lender be unsatisfactory, you have six months in which to contact the FOS asking them to look in to the complaint. If you leave it longer than six months the FOS will not be able to review your complaint.
The Financial Services Compensation Scheme (FSCS) and Overdraft PPI Complaints
Set up in 2001, the Financial Services Compensation Scheme (FSCS) was created to protect consumers when an authorised financial services provider they purchased a product from stopped trading.
The FSCS can award compensation for any wrong doing by the failed finance company, if they are unable to due to them being in default or because they have stopped trading.
It must be noted that the FSCS will pay up to 90% of an overdraft PPI claim for the financial loss incurred.