What is PPI?
PPI stands for Payment Protection Insurance. It is a financial product designed to cover repayments on loans, mortgages and credit cards which you may not be able to meet if you find yourself out of work due to illness, redundancy or other reason.
Having PPI cover would mean that if you fell ill, became unemployed, or found yourself in a situation which meant you were not earning money, your repayments would be covered.
PPI also went by many other names, such as: ASU insurance (Accident, Sickness and Unemployment), Life & ASU insurance (Life & Accident, Sickness and Unemployment cover), PLP (Personal Loan Protection), CCRP (Credit Card Repayment Protection) and MPPI (Mortgage Payment Protection Insurance).
These insurance policies were often sold alongside loans, mortgages and credit cards
How was PPI Missold ?
Many sales staff at banks and other financial companies were under heavy pressure to meet certain targets each day in the 1990s. Encouraged to sell PPI wherever possible – due to its strong profitability – many of them sold PPI incorrectly, going against the industry regulations in order to reach their targets.
PPI was mis-sold in many different ways, with some of the most common being:
The bank telling you that it was compulsory.
Customers were sometimes told by the banks and lenders that PPI cover was necessary in order to receive the loan they were applying for. Sellers would either not mention it was an optional extra, or imply that those in charge of deciding whether you would receive your loan would be more likely to accept your application if you took out PPI cover.
You received it without asking for it, or without knowing you were having it. You might not have discussed PPI properly with the seller, yet they subtly added it to the loan documents without you asking to have it.
It was sold to you for an expensive price
If PPI was sold to you at a high price, then you may have barely gained any money if you ever ended up claiming on it, even if you were eligible for the maximum payout. Because the policy would not actually benefit you properly, it can count as being mis-sold.
It was unsuitable for you to have it
Some people had no need for PPI cover. They were either fully covered anyway by another policy, or their personal situation made it impossible for them to ever claim on it, such as having a pre-existing medical condition, for example. You may have reached retirement age during the policy’s timeframe, for example, making the PPI mis-sold.
How do I know if I’ve had PPI
Your statements or other relevant documents should have PPI listed on them, potentially under other names such as: ASU insurance (Accident, Sickness and Unemployment), Life & ASU insurance (Life & Accident, Sickness and Unemployment cover), PLP (Personal Loan Protection), CCRP (Credit Card Repayment Protection) and MPPI (Mortgage Payment Protection Insurance).
How do I check and spot PPI payments?
For PPI on loans or mortgages, you will probably be able to find signs of PPI payments on your original agreement. For PPI on credit cards, it should show up on your statements. Generally it would have been charged monthly.
Remember to check for the different names PPI was sometimes called on your documents, such as: ASU insurance (Accident, Sickness and Unemployment), Life & ASU insurance (Life & Accident, Sickness and Unemployment cover), PLP (Personal Loan Protection), CCRP (Credit Card Repayment Protection) and MPPI (Mortgage Payment Protection Insurance).
Why should I make a claim?
The Financial Conduct Authority (FCA) – formerly the Financial Services Authority – discovered that PPI had been mis-sold by many banks and lenders across the UK on a major scale.
There were 20 million PPI policies in the UK by mid-2008, with an estimated seven million added to credit agreements annually. Based on this, PPI may have been mis-sold to more than 70 per cent of the UK, with potentially more than 40 per cent of policyholders not even knowing it was attached to their loan, mortgage or credit card.
Considering this, it is reasonably possible that if you took out credit in some form during the last few decades then you may well have been mis-sold PPI on it, or been charged an unfairly high amount of commission on it, and therefore you may be entitled to compensation.
Additionally, many cases which have been rejected by lenders later go on to be overturned by the Financial Ombudsman Service (FOS).
Can I make a PPI claim myself?
While you have every right to deal with your claim yourself, some people may feel like they don’t have the spare time or patience to do this. PPI claims involve completing questionnaires, chasing up banks, and can take various different routes.
Using a claims management company means they can use their knowledge and experience to guide you through the claims process.
How far back can your PPI claim be dated?
PPI is known to have been mis-sold from as far back as 1988 up until 2014 in some cases.
How much could I get back?
If your PPI was mis-sold, the amount of compensation paid out is generally your PPI premiums plus gross interest at 8 percent. If you paid more interest on your loan, mortgage, credit card or other product as a result of having PPI, then you may receive more compensation.
What happens if I’ve missed repayments?
Should you have missed any payments on the loan, credit card or mortgage which you are claiming for, any compensation you receive would be used first to clear any arrears, before the any payment is made to you.
The Financial Ombudsman Service (FOS) offers a free and impartial advice service for consumers, and we recommend that you speak to them or to a specialist debt advisor about your financial situation.
Can I still make a claim even if my PPI policy has expired?
Yes. No matter when the policy expired, provided the PPI was mis-sold, you are entitled to make a claim.
What if I don’t have any paperwork?
Financial companies must keep records of all their customer’s transactions and dealings for the past 6 or more years, so they may still have your records for you. If you paid off your loan more than 6 years ago, there may not be any available records. However, there have been cases in which claims have been made against cases of mis-selling over 20 years ago, often without paperwork.
How long do PPI claims take to process?
Our average timeframe is between 8-16 weeks from the date of the lender’s acknowledgement to a decision being made.
Should your claim be rejected and you then appeal to the Ombudsman, you can expect to wait several months longer. However, many claims that are rejected initially go on to be overturned by the Ombudsman so it is generally worth the wait.
The more details you can recall about your agreement, the more likely it will be that your lender can locate and verify you against their systems. This can help avoid requests for further information which can delay a decision being made.
I am currently in a Debt Management Plan Can I still claim?
Being in a debt management plan (DMP) does not have any effect on your right to make a claim. However, your own situation may differ, depending on your agreement with the debt management company you should be aware of the following:
- You may be required to let your debt management company know that you plan to claim, as well as informing them about any subsequent compensation.
- If the loan, credit card, mortgage, overdraft or other account you are complaining about was included in the DMP, your lender may automatically deduct some or all of the compensation and pay it to your debt management company.
- If it was not included, then it is possible that you might still be required to make a payment to the debt management company.
- It is possible that you may not end up with any money left over after paying back your DMP, however you will still have benefited from making the claim because your outstanding debt will have been reduced.
I have an IVA or have been declared bankrupt, can I still claim?
If you are going through or have recently been through an IVA or bankruptcy, you must speak to your insolvency practitioner or debt adviser before making a claim.
What if the finance company no longer exists?
If your PPI policy was taken out after 14th January 2005 your claim can be taken to the Financial Services Compensation Scheme (FSCS). The FSCS is the UK’s compensation fund of last resort. They may pay compensation if a firm is unable, or likely to be unable, to pay claims against it. This usually takes place when the original lender either no longer exists or is bankrupt.
How will this affect my relationship with the lender?
A claim should not affect your relationship with the lender, because it is the lender’s duty as part of the FCAs “Treating Customers Fairly” (TCF) initiative to ensure that all customers are treated fairly.
The FCA are very serious about this being carried out, saying: “TCF remains a vital part of our supervisory approach and as such, it has been fully integrated into our core supervisory work. This will help to safeguard the legacy of the significant effort made by the FCA and by firms on their TCF programmes, in terms of improved outcomes for consumers. Where we find failings, we will use our full range of regulatory powers to take action.”