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As the total compensation figure for mis-sold PPI cover tops £13 billion; millions of UK households are reaping the benefits of digging out their paperwork and making a claim.
What is PPI?
PPI is Payment Protection Insurance that was often sold alongside loans, credit cards, store cards, mortgages, and other credit agreements. PPI can also come under alternative names such as credit insurance, credit protection insurance, or loan repayment insurance. The purpose of this form of insurance was to cover you in the event of illness, disability, loss of employment, death, and other circumstances that would prevent you from being able to make your repayments.
How do I know if my PPI was mis-sold?
In broad terms, PPI was mis-sold to you if any of the following applies:
- If you felt ‘pressured’ into agreeing to PPI
- If it was not made clear that PPI was optional
- If you were advised to take out PPI even though it wasn’t suitable for your personal circumstances
- If you thought that agreeing to PPI was mandatory in order to secure credit, or that it would increase the chances of your application being approved
- If key exclusions were not explained to you at the time, such as being self-employed or having a pre-existing medical condition
- If your personal circumstances would have prevented you from being able to successfully make a claim on your PPI
- If you were unaware that your agreement had PPI, or it was added without your knowledge
- If it was not made clear that you would be liable for paying additional interest on any PPI premium applied to your credit amount
- If it was not made clear that your PPI protection would end before you had paid off the credit agreement in full
There may be other scenarios where PPI was mis-sold. If you are in doubt, you can contact the Financial Ombudsman for a decision.
Who can make a claim?
If you entered into any credit agreement before April 2012 where PPI was included, the chances are that you are eligible to make a claim. Here are some of the common FAQs that might be applicable to you.
Can I claim PPI if I don’t have any paperwork? Or I can’t remember the name of the company?
Yes. It doesn’t matter if you can’t find any documentation or can’t remember the name of all your previous creditors. You can check your credit record through a credit referencing agency as this will give you a list of names. Each company should have a record of whether or not you took out PPI with them, so whilst any documentation you do have will make the process easier; it is not essential for making a successful claim.
Can I still make a claim if I’m not sure what I was told at the time?
Yes. If you can’t remember what was said to you when you were sold PPI, it is still possible to make a claim. In these cases, if the PPI you bought wasn’t relevant to your personal circumstances i.e. you were retired but the insurance covers unemployment, your occupation fell under an exclusion, or you had a pre-existing medical condition which made you ineligible then you should be able to claim back PPI.
Can I claim against current credit agreements?
Yes. Provided that you entered this agreement before April 2012 and PPI was mis-sold, you can make a claim for any ongoing, existing credit.
Can I claim PPI if I live abroad?
Yes. You can make a claim regardless of where you currently live, provided your PPI was bought through a UK company.
Can I make a claim even if the company no longer exists or has been taken over?
Yes. You can still make a claim even if the company you originally bought your PPI from has since gone into administration, been dissolved or gone bust. The FSCS (Financial Services Compensation Scheme) is in place to protect consumers in exactly this situation, and you should still be able to get the full refund due to you.
You can make a claim even if the original finance provider has since been taken over by another company. In this situation, your claim would go to the new company.
Can I make a claim if I’ve been declared bankrupt or had an IVA?
Yes. You can make a PPI claim after your bankruptcy or IVA agreement has ended. However, you need to be aware that any refund could potentially be clawed back under the clause ‘unrealised asset’. The financial provider, particularly if it was a bank, may try to argue that they want to offset any amount against the sum you originally owed them. If you have a certificate of completion for your IVA, then this argument may be null and void but it’s very much a grey area of law at the present time.
There is no rule against making a PPI claim whilst you are bankrupt or within an IVA agreement, however, it is worth bearing in mind that any ‘windfall’ will be immediately seized to help pay off your existing creditors.
Can I claim PPI on behalf of a deceased relative?
Yes. You can claim back PPI on a policy taken out by a now deceased relative. However, each individual’s circumstances are different, and not all claims will be successful or directly benefit you. You will need proof of your relationship to the deceased as well as evidence of their passing, such as a death certificate in order to make a claim.
Is there a time limit?
No. There is no time limit on how far back you can make a claim. It is worth noting that banks and other finance companies are not required by law to keep records over 6 years old, so if your PPI was sold prior to that, then it may be more difficult and take longer to make a claim unless you have all the relevant paperwork.
Types of credit that you claim back PPI:
- Secured loans
- Personal (unsecured) loans
- Credit cards
- Store cards
- Car finance
- any other credit facility
Who cannot make a claim?
You won’t be able to make a claim if you have ever benefited from the PPI you bought, i.e. you were out of work for 3 months and your PPI covered your repayments for those 3 months.
If your PPI cover would have covered you and you could have successfully made a claim in the event of accident, illness or death; then you are less likely to obtain a refund unless you can prove it was mis-sold in a different way.
How Long Does A PPI Claim Take?
If you think that you are owed PPI and wish to make a claim then you’ll probably want to know how long it might take before your case is settled and you receive any money due.
One thing you should be aware of is that while private claims companies often say they can get your money back quicker than doing it yourself, there is no basis for this if you are organised and willing to do what is necessary for a quick resolution.
The only thing you have to ask yourself is whether or not you have the time to go chasing your lender and/or the ombudsman should you need to – a claims specialist can take care of this for you.
Stage 1 – Filing Your Claim With Your Lender
Time scale – up to 8 weeks
When you first contact your lender to file a formal claim for compensation, the amount of time taken for them to respond to your case does vary and while some companies move swiftly, others are known to prolong the process as much as they can.
Banks and other lenders are liable for the whole amount plus interest but some may try to avoid a portion of this by offering you a lower deal for a quick resolution. While you obviously want to proceed with your claim and any subsequent payment in a timely manner, don’t be lured into the trap of accepting a smaller offer of compensation than you are entitled to.
If, after 8 weeks, you still haven’t had a response from your lender (or your lender has refused your case) then you will have to contact the Financial Ombudsman Service (FOS).
Stage 2 – Going to the Ombudsman
Time scale – up to a year
If, for any reason, your lender is not willing to settle your case directly then you will have to approach the Ombudsman and have them resolve it based on the evidence provided by both parties (you and the lender).
Because of the sheer volume of new claims coming in from PPI and other financial products, the FOS has added a further 1000 staff but even so it can take a long time for them to reach their decision.
The length of time required to process your case depends on how complex it is and whether or not any further information is required and how long it takes to obtain it. In rare circumstances it can take as much as a year to reach a climax while other cases might be settled in just a few months.
While the FOS typically reviews case in the order they receive them, there are some special circumstances where a case may be prioritised. These include situations where:
- the claimant would face significant financial hardship if any delay were to occur (e.g. the threat of repossession of the claimant’s property).
- a delay might impact the claimant’s health or wellbeing or cause undue distress and inconvenience.
- the claimant might experience a significant worsening of their financial position should the case not be resolved (e.g. a debt not being repaid until compensation is received).
One thing any claimant can do to ensure the fastest possible resolution to their case is to provide requested information as fast as possible – next day recorded delivery is recommended.
Stage 3 – Receiving The Compensation
Time scale – up to 8 weeks
Once your PPI compensation claim has been resolved and you are satisfied with the amount to be paid, you will usually receive either a cheque or direct BACS payment.
Some lenders may require you to confirm you are happy with the amount (assuming it didn’t go to the Ombudsman) but others will arrange for payment automatically unless you tell them otherwise.
While most lenders state that they will aim to pay the agreed amount with 28 days, there are many reports from members of the public stating delays of up to 8 weeks. These claimants were told that this is due to the number of claims being processed.
What This Means For You
If you haven’t yet made a claim for any PPI you believe was mis-sold, what you should take from this article is that the sooner you start the process the better. Because of the long time frames that can be involved, there is no reason to delay – get all of the relevant information together now and either speak to a PPI claims company or write to your lender and include copies of all the evidence you have gathered.
Should I Go It Alone When Reclaiming PPI?
One question many individuals will naturally have is whether they should attempt to claim a policy with or without the help of a third-party accredited claims institution.
In such a situation, there are both pros and cons of attempting to file a claim individually and you must consider various options before undertaking what can prove to be a monumental task.
Claiming By Yourself
First, let us examine the potential benefits of filing a claim individually. The most obvious benefit is that there will be no added expense in regards to paying a claims company for providing their services. The fees incurred can often be quite substantial and, depending on the size of the claim, may very well leave the claimant little financial remuneration at the end of the process.
Should you choose to “go it alone”, you must ascertain the specifics of any dispute you may have. This may be quite clear should there be sufficient evidence that misselling has occurred. Such instances may include, but are not limited to, overpriced policies, an insufficient explanation upon purchase, the so-called “mandatory PPI” required for a specific loan or possessing a policy whose clauses prohibit the policyholder from using it.
Should these factors be obvious and should you have direct evidence, personally filing a claim is recommended because the processes involved are relatively straightforward. Simply stated, if an individual case is clear-cut and enough evidence already exists, then a third party’s involvement may be redundant and costly.
Employing The Services Of A PPI Claims Company
One of the main pitfalls with filing a PPI dispute is that such evidence may not be altogether apparent. An advantage of partnering with a claims specialist is that they are familiar with all the laws and associated nuances. Any necessary information regarding either the policy or the issuer can be found expeditiously and other important variables such as if the FSA has already taken appropriate action can make the claims process much easier. They can also reduce how long it takes for a PPI claim to reach a conclusion – in other words, you may get your money sooner.
There are many instances where people have held a PPI policy for a number of years. In fact, some have continued to pay into a policy for a decade or more. In these instances the potential financial return can be large enough to warrant employing a claims professional; not only can they make certain the paperwork and eventual result is in order but whatever fees may be accrued will be relatively minor in comparison to the overall refund.
Also, it is important to note than most PPI claims specialists operate on a system where if they pursue a claim unsuccessfully they will not charge a fee. It is therefore in their best interest to ensure their clients are rewarded.
A Fork In The Road
The path you choose to pursue ultimately depends on your individual circumstances and how your policy was initially presented upon purchase. Should you choose to pursue a claim on your own, you must first understand the time and effort which may be involved. Regardless, there is no harm in scheduling a no-obligation appointment with a PPI claims specialist who can determine the merit of a claim on a case by case basis.
What should I do now?
If you think that you were mis-sold PPI, then it is in your best financial interests to consider making a claim. Whilst the BBA (British Banking Association) was recently denied the opportunity to cap refunds for PPI by applying a cut-off date; there are no assurances that this won’t eventually happen.