1. Do I have PPI?
If you have ever taken out any kind of credit, including credit cards, bank loans or mortgages, then you should check all of the documentation associated with this credit to see if you have been paying PPI. Remember, PPI is referred to by many different names including loan insurance, credit card insurance, mortgage protection cover and credit protection insurance.
If you no longer have any of the documentation associated with the credit, you can write to the credit provider asking them to provide you with details of any Payment Protection Insurance that you have been paying. Alternatively, check your bank statements for regular charges which you cannot explain.
| Unsecured | £8,993 | £2,217 | 25% |
| Unsecured | £11,000 | £5,133 | 47% |
| Hire Purchase | £5,059 | £2,157 | 43% |
| Hire Purchase | £6,895 | £2,317 | 34% |
| Unsecured | £5,600 | £744 | 13% |
| Secured | £25,000 | £12,127 | 49% |
| Secured | £35,000 | £10,150 | 29% |
| Hire Purchase | £4,300 | £2,394 | 56% |
| Unsecured | £13,000 | £3,367 | 26% |
2. Was my PPI mis-sold?
Just having PPI is not enough – you will only be able to get a refund if the PPI was mis-sold to you. There are a number of grounds on which it is possible to claim that a PPI policy was mis-sold, including scenarios where the PPI was added without the consumer’s knowledge, and where the consumer was not eligible to claim under the PPI because he didn’t meet the strict policy criteria. See below for a list of the most common grounds for a PPI mis-selling claim.
3. Is my claim within the time limits?
The Financial Ombudsman Service cannot usually consider claims where the PPI was sold before January 2005 as this is the date at which the selling of PPI became regulated by the Financial Services Authority. Before this date, banks and building societies were regulated, but loan and insurance companies weren’t. However, in some cases the FOS will still investigate the complaint under the old banking rules if the PPI was sold to you by a bank or building society so it may still be worth making a claim.
The Financial Ombudsman Service rules require mis-sold PPI claims to be brought within 3 years of the date at which you could reasonably have been expected to be aware that you had been mis-sold the PPI. This means that if you think that you might have a PPI policy, you should make a claim as soon as possible to avoid missing this deadline.
4. If in doubt…
If you cannot be sure whether you have Payment Protection Insurance, or whether you are within the time limit, then you may want to make a claim anyway. The company that you are claiming against is legally required to respond to your complaint in writing, and they will tell you if there is no Payment Protection Insurance on your account.
What are the most common grounds for making a mis-sold PPI claim?
If you have a PPI policy, you can make a claim that this has been mis-sold to you if there has been any breach of Financial Services Authority rules, or any unfair pressure or influence by the salesman. There is no fixed list of grounds for mis-selling, but the most common include:
- You were not aware that you had taken out a PPI policy – often salespeople would hide information about the PPI in the small print and would add the policy to the loan without specifically informing the consumer of this.
- You were told that the loan was conditional on the PPI – in effect, the salesperson told you that if you did not agree to take out a PPI policy then you would not be approved for credit.
- You were under 18 or over 65 at the time the PPI was sold to you – in these cases your PPI contract would be invalid and you would never be able to make a claim under it.
- You worked less than 16 hours per week
- You were employed on a temporary or fixed term contract – PPI is meant to cover you if you are unable to work because you are made redundant, have an accident or fall ill. If you are employed on a temporary or fixed term contract then there is a very high risk of this. Usually PPI policies do not cover people unless they have a permanent contract, and the salesperson would have been aware of this when he sold the policy to you.
- You had been made redundant at the time the PPI was sold to you, or you knew that you were going to be made redundant – in this case you would not have been entitled to the protection of the policy and the salesperson should have informed you of this.
- You were not made aware that you might be able to buy the same policy cheaper elsewhere
- You had an pre-existing illness or condition - in the eyes of the insurers this increases the risk that you would be unable to work, and so it is likely that the terms of the PPI would have prevented you from claiming the benefit of the policy.
How much is my claim worth?
If you have been mis-sold payment protection insurance then you will be able to make a claim for a full refund of any payments which you have made towards the PPI. Whilst this is easy to calculate if you pay your PPI monthly by direct debit, this is not always the case.
Sometimes, where you have taken out a loan or mortgage for a fixed number of years, the loan company will work out what the policy premiums would be over the lifetime of the loan and will ask you to pay all of this up front as a single premium. Often this is many thousands of pounds, and because you would not be able to afford this, it is added to the total amount of the loan. In many cases, the PPI element of the loan is almost as much as the amount which you originally wanted to borrow. For example, the following are examples of real loans which had PPI policies attached:
In each of these cases, the consumer was charged interest on the massive PPI element of the loan at the same (or sometimes even at a higher) interest rate than on the main loan amount. This means that a PPI claim could potentially be worth tens of thousands of pounds.
If you are able to show that the PPI was mis-sold then you will be able to reclaim all costs that you paid, and any additional interest which has been added to your loan because of the PPI will be written off.