What is payment protection insurance?
time is running out
You have until 29 August 2019 to complain about the sale of PPI.
Find more information about this and how to claim on the FCA website.
Payment protection insurance (PPI) is commonly sold alongside other financial products such as credit cards, store cards, mortgages and different types of loans.
It is designed to cover the payments in case of illness, accident, redundancy or death.
What PPI compensation you could reclaim
The average customer payout for loan PPI compensation is around £2,000.
How do I know if I've been mis-sold PPI?
Have you ever had a mortgage, credit card or loan? If so, you may have been mis-sold PPI.
Previously, PPI was sold at the time you took out a loan, credit card, mortgage or car finance deal. The idea was that PPI would cover the monthly payments on your credit agreement if you became ill or lost your job.
However, sales staff often didn’t explain the policies properly and they were often sold to people who weren't eligible for cover. For example, to people who were self-employed or with pre-existing medical conditions. As a result, many policies didn't pay out when people needed them to.
A more recent guideline for mis-selling is about commission lenders received on PPIs. If more than 50% of the commission of your PPI went to the lender and you weren’t told about it, you also might be owed compensation.
If you remember having a similar conversation, but not told the correct details, there’s a chance you were mis-sold PPI and can claim.
What if I don't remember being sold PPI?
There’s a chance you were sold PPI without realising it. In some cases the salesperson didn’t explain the PPI policies when they were sold.
Or they may have said you had to take out PPI, or that you had a better chance of getting a loan if you took it out. If this happened to you, odds are you were mis-sold PPI.
It’s worth checking any mortgage, credit card and loan agreements. If you can see any of the following terms in the documents 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
Beware! 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. 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 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 is 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. The Ombudsman will ask you to fill out a questionnaire to decide whether or not you've been mis-sold.
Find out more about claiming for mis-sold PPI and the 29 August 2019 deadline on the FCA website.
Don't use claims management companies
Claims management companies will offer to help you with your claim. You might have seen their adverts, or even received texts or phone calls from them.
Don't use them.
Making a claim is pretty straightforward. Just follow the steps listed above and use the template provided.
Why to avoid them
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 banks are processing their claims more quickly, but this isn’t true. You won’t lose out if you make the claim yourself. In fact, you’ll end up with more money.
And that’s money you can use to pay off your debt.
How to complain about a claims management company
On 1 April 2019, the FCA took over the regulation of claims management companies (CMCs) from the Claims Management Regulator. Not all CMCs transferred to FCA regulation – some CMCs chose to stop managing claims instead.
If a CMC is currently handling a claim for you, but opted not to be regulated by the FCA, they may have contacted you to explain how to continue your claim.
If you are unhappy with the service you have received from a claim’s management company, you can now complain directly to the Financial Ombudsman Service.