How to claim for mis-sold payment protection insurance (PPI)
Payment protection insurance (PPI), which is designed to help you keep up payments on your loans and or credit cards in the case of illness, accident, redundancy or death has been mis-sold to millions of people. However, the good news is you might now be able to claim compensation. If you think you’ve been mis-sold, find out how to make a PPI claim.
What PPI compensation you could reclaim
Figures from the FCA show around 85% of single premium policy claims (that is, policies paid for with a lump sum upfront) for compensation are successful. The average customer payout for loan PPI compensation is around £3,000.
How to find out if you’ve been mis-sold PPI
If you’ve had a mortgage, credit card or loan you might have been mis-sold PPI.
Until recently, PPI was sold at the time you took out a loan, credit card, mortgage or car finance deal.
The idea being that PPI would cover the monthly payments on your credit agreement if you became ill or lost your job.
However, the policies often didn’t pay out when people needed help. Sales staff often didn’t explain the policies properly.
For example, to people who were self-employed or with pre-existing medical conditions.
Policies were often sold to people in these groups when they weren’t eligible for cover.
If you remember any such conversation, there’s a chance you were mis-sold PPI and can claim.
There’s also a chance that you could have been sold PPI without realising it.
In some cases the salesperson didn’t explain the PPI policy at all when you bought it, or said you had to take out PPI or that you had a better chance of getting the loan if you took it out. In these cases you were mis-sold.
It’s well worth checking any mortgage, credit card and loan agreements.
If you can see any of the following terms or similar, you’ve probably been sold PPI:
- Loan care
- Payment cover
- Protection plan
- Loan protection
Even if you can’t find the documents, it’s still worth claiming if you think you were mis-sold PPI.
How to claim PPI
A claims management company will take a quarter of your PPI compensation or more – there is no need to use one.
- Find all the documents you can and make copies of anything that might be relevant. This includes anything that shows you’ve taken out a policy, and shows you making payments for it. If you’re not sure whether it’s relevant, just copy it anyway.
- Write a letter to the mortgage, loan or credit card provider who sold you the PPI. It shouldn’t take too long to do if you use the Money Advice Service template letter or you can fill in the questionnaire which most of the banks have on their own websites. It’s a standard form that’s also used by the Financial Ombudsman Service. Send all the documents you think might be relevant. Explain why you think you were mis-sold PPI.
- If you don’t get a response or decision within eight weeks, send a letter of complaint to the Financial Ombudsman Service (FOS). The Ombudsman will ask you to fill out a questionnaire to decide whether or not you’ve been mis-sold.
Avoid claims management companies
You might have heard about claims management companies who are offering to help you with your claim.
They’ve been advertising on the radio as well as sending out texts and voicemail messages.
There’s no need to use one of these companies. Most people will have no problem making a claim as it is relatively straightforward, and a claims management company will typically take a quarter of your compensation or more.
They might also try to charge you an upfront fee, and some companies have gone bust without doing any work to reclaim customer’s money.
Some claims management companies say that the banks are processing their claims more quickly than those made by individuals, but this isn’t true.
You won’t lose out if you make the claim yourself. In fact, you’ll gain because you’ll end up with more money.
And that’s money you can use to pay off your debt.
If you’re unhappy with the service you have received from a claims management company, you can complain directly to the Claims Management Regulator.
The Claims Management Regulation Unit on the Ministry of Justice website gives you all the steps you need to take before a complaint can be heard.
You can also find more information on mis-sold financial products and services such as payment protection insurance (PPI) and insurance.
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