Loan PPI Claims
What Is Loan PPI?
Payment Protection Insurance (PPI) isn’t as difficult to understand as some would have you believe. It was an optional add-on insurance policy to cover the repayments on financial products such as mortgages, loans and credit cards.
The purpose was to cover policy holders who could not work and therefore meet their monthly repayments due to sickness, long term injury or redundancy.
Banks and lenders sold PPI alongside loans to more than 20 million people over the last few decades, earning billions of pounds in profit.
However, lots of these insurance policies were mis-sold, not just by banks and lenders but also by third party brokers. It was done quite easily compared to credit cards and other products, due to the large size and length of most loans; they typically last as long as ten years, making it more likely that a customer would not be in work at some point during the loan.
Because customers were supposedly at a greater risk of being without work and therefore missing their repayments, they were frequently pressured into taking out PPI with their loans.
Types of loans PPI was sold with
PPI was often sold with the following types of loans:
- Business loans
- Flexible loans
- Hire-purchase agreements (used when buying cars and caravans)
- Home improvement loans (includes double glazing)
- Personal loans
- Point of sale loans (when buying furniture or electrical appliances)
- Secured loans
Lenders that sold loan PPI
The following list of finance providers are known to have mis-sold PPI on loans:
- Bank of Scotland
- Clydesdale Bank
- EGG (EGG Loans)
- First Direct
- Halifax Bank
- Lloyds Bank
- Lloyds TSB
- MBNA (MBNA & Virgin loans)
- Royal Bank of Scotland (RBS)
- Yorkshire Bank
This is not an exhaustive list of loan providers that included PPI with the finance. If you dealt with a firm not listed above or in the lender pages, please contact us for further assistance.
What Are Loan PPI Charges & Costs?
There are two ways in which loan PPI is sold and charged for but this depends on which product it was sold with; Single Premium loan PPI and Monthly Premium loan PPI.
Single Premium loan PPI - These policies charge an upfront premium that covers the insurance cost. The premium is added to the sum borrowed and interest is then charged on the PPI premium and on the loan. The customer therefore repays not only the monthly loan repayment but also the premium and the interest on it.
What customers may not know about single premium PPI policies is that they don't cover the duration of the loan, it usually only covers a 12-month period. Also, customers who settled their loan early, were not refunded the remainder of the single premium PPI cover that was no longer needed.
Single premium PPI on unsecured personal loans was banned by the FSA in October 2010. The reason for the ban is because the entire cost of the insurance has to be paid upfront, it leads to the borrower having to pay much more in initial repayments than they would otherwise pay.
Monthly Premium loan PPI - these are also known as regular premium PPI that are paid for on a monthly basis.
There are significant differences between this and the single premium PPI:
- Monthly PPI policies can be cancelled at any time;
- Single premium PPI can only be cancelled in the first 30 days of the policy starting and be refunded fully;
- Cancelling a single premium PPI policy after 30 days, you will only get back a proportion of the premium paid.
With the above in mind monthly premium PPI seems to offer better value than single premium PPI on loans.
Ways in Which Loan PPI Was Mis-sold
PPI was such a profitable product for banks and financial services providers that customers were being sold it regardless of if PPI was needed, wanted, or suitable. In addition to this many people who had it didn’t know they had it, because it was added to their accounts without the customer’s consent or knowledge.
An investigation by the Citizens Advice Bureau and by the FSA uncovered the wider problem of selling PPI mis-selling. Proper checks had not been carried out to establish if the customer was eligible for PPI in the first place and if they understood if the product was right for them.
Furthermore customers were not given a choice of which type of PPI, if any, to take out. Many customers were sold single premium PPI policies instead of being offered monthly premium loan PPI policies.
There are several ways in which loan PPI may have been mis-sold to you:
- You were unaware that you were being sold loan PPI;
- You felt under pressure to take out the loan PPI in order to be approved for the loan;
- The lender did not check if any of the exclusions applied that would make it impossible to claim on loan PPI policy;
- You were led to believe that the loan PPI purchase was compulsory and not an optional extra at the point of sale;
- Your employment already provided you with this type of cover or you had another PPI policy in place;
- If your age at the time of taking out the loan PPI was past retirement you would not qualify for the PPI;
- At the time of taking out the loan PPI you were self-employed, unemployed or retired;
- Any pre-existing medical conditions you had were not considered at the time of taking out the loan PPI;
- No information was provided to you about your right to cancel the loan PPI policy.
Don’t Recall Which Loan Provider You Used?
Trying to remember different loan providers used previously can be difficult, but it doesn’t mean you can’t still check for mis-sold PPI or put a claim in.
There are many cases where people cannot remember which providers they have used, mainly because of how long ago it was or the number of lenders they’ve used over time.
Looking for any paperwork relating to past loans will help to identify lenders and determine if you had PPI or not. If you don’t have any documentation, we may be able to help in trying to identify your past lenders.
How Much Will I Get If My Loan PPI Claim Is Upheld?
If your loan PPI claim is successful, the amount you are compensated by will consider the following:
- How much PPI you paid per month depending on if it was a single premium PPI policy or a monthly premium PPI policy;
- The amount of interest added;
- Any charges for missed payments or arrears that could have affected the cost of the PPI.
When the above facts have been assessed and the amount to be refunded has been calculated, an additional sum for statutory interest at 8% should be added. This will make up the total amount payable for mis-sold PPI.
High Commission Claims & Plevin
The Financial Conduct Authority (FCA) in August 2017 introduced a new ruling for PPI mis-selling called ‘Plevin’. Under this ruling, anyone who had PPI from a bank or lender attached to an active finance product since 2008 may be owed some money. In the past, in order to reclaim any PPI, you had to have been mis-sold it. The FCA’s new rule says if over 50% of your PPI cost went as commission to the lender, and that wasn’t explained to you, you can claim back the extra above that.
Following the ruling, the FCA set out guidelines that defined high commission as being more than 50% of the cost of the PPI premium and further stated how banks should investigate and correct PPI commission.
The Plevin ruling will not apply to everyone for example if as a result of a previous claim, you’ve already received a PPI refund, you cannot now claim for unfair commission.
If you have already raised a previous complaint for mis-sold PPI which was not upheld, you may be able to claim about the commission charged on your PPI policy. You may be eligible if the any of the following apply:
- the loan with the PPI was sold to you on or after 6 April 2007; or
- the loan with the PPI was sold to you before 6 April 2007 and was still in effect on or after 6 April 2008.
How Long Do I Have To Make A Loan PPI Claim?
The FCA has set a deadline of 29 August 2019 by when all claims for mis-sold PPI need to be submitted.
This means that your mis-sold loan PPI claim must be submitted before this date. New claims cannot be lodged after this date.
There may also be other time limits to considers, so act now and put in your loan PPI complaint as soon as possible.
Frequently Asked Questions on Loan PPI Claims
Read our frequently asked PPI claims related questions and answers. In the majority of cases the first step to making a PPI claim is to get a PPI check done with the lender.
Other Organisations That Can Offer Help and Advice on Loan PPI
There are some regulatory bodies who can offer information and assistance regarding PPI: The Financial Conduct Authority, the Financial Ombudsman Service and the Financial Services Compensation Scheme.
Financial Conduct Authority (FCA)
12 Endeavour Square
Tel: 0800 101 8800
The FCA are the finance industry regulator in the UK. They ensure customers are treated fairly by financial services organisations, that include banks, credit card companies, loan companies and building societies.
Individual mis-sold loan PPI complaints are not dealt with by the FCA, but they can provide general PPI information. Contact the PPI provider directly, all regulated companies have procedures in place to deal with PPI complaints.
If your claim has been rejected by your provider the matter can be referred to the Financial Ombudsman Service (FOS). They can look into the matter and give you their decision.
Financial Ombudsman Service (FOS)
Tel: 0800 023 4567
The FOS deals with complaints and disputes made by customers of UK banks, building societies, insurance companies and other financial services organisations including advisers.
For the FOS to look into your loan PPI complaint you will need to have contacted the organisation concerned and allowed them to put the matter right. If you’re not happy with the organisation’s response or lack or response, only then can the FOS get involved. However, you will need to contact the FOS within 6 months after receiving the final response from the organisation concerned for them to be able to investigate the matter.
Financial Services Compensation Scheme (FSCS)
PO Box 300
Tel: 0800 678 1100
The FSCS is there to protect customers in the event of an authorised financial services organisation fails i.e. firms that are authorised by the FCA and the Prudential Regulation Authority.
If the organisation you are dealing with has gone out of business, cannot pay the claims made against it or has been declared in default, the FSCS can make an award of compensation. The award will only be a maximum of 90% of the loan PPI claim where there has been actual financial loss.
Loan Providers who are facing mis-sold PPI Enquiries
The following is a list of loan providers who are known to have sold PPI. Please note this is not an exhaustive list.