Time is running out for consumers to make PPI compensation claims. If you feel you may have a valid claim you should start the process now. New rules may stop you from claiming mis-sold PPI. This guide helps you determine the validity of your PPI claims.
It is a well-known fact that many lenders sold payment protection insurance to those who didn't really need it. This mis-selling was widespread and affected millions of people who could not have used the insurance in the event that anything had happened to prevent them from meeting their repayment obligations. Now, the rules are set to change on claims for mis-sold PPI and thousands of people stand to miss out on reclaiming significant sums of money that is rightfully theirs. Read on for information that can help you to avoid becoming one of them.
What Is PPI?
Payment Protection Insurance (PPI) is a form of insurance that was once sold indiscriminately to practically anyone who was taking out any form of credit, whether a credit card, a store card or a loan. The insurance is designed to cover the repayments due under the agreement should the borrower become unable to meet their commitments. This replacement was usually for a finite period (often a year), after which the borrower needed to find another way of meeting their financial obligations. As the insurance was designed to cover issues such as unemployment or critical illness, a year was deemed adequate time for recovery or for alternative employment to be gained.
How Was It Mis-Sold?
The big issue with PPI came from the way in which it was sold. Telesales staff were often used who were paid on commission and who had targets to meet, meaning that it was a numbers game and little, if any, attention was paid to the actual requirements of the borrower. Sales techniques were often aggressive, with many sales scripts hinting at the idea that the borrowing might not be offered unless the PPI was agreed to at the same time. For well over a decade, the wholesale mis-selling of PPI insurance went on without checks, with many consumers being unaware that they even held the insurance and many more being coerced into purchasing it for fear of being refused credit.
What Happened Next?
Although PPI can be very useful insurance, the policies that were mis-sold often left the borrower paying a huge premium for a product that was essentially useless to them if they found themselves in a position in which they needed to make a claim. The landmark case in the world of PPI claims was way back in 1992, in which the judgement held that the premium cost was almost as high as the benefit that could be claimed. The case was settled, but a non-disclosure clause of 10 years was part of that settlement, so it was another decade until the judgment was made public. It was following publication that a judicial review was held, ruling in favour of the borrowers and opening the doors for further claims.
Was I Mis-Sold PPI?
It's common for many people to apply for their credit online. In these instances, making a claim may be hard, as the full terms and conditions are available online and a borrower is expected to have read them before agreeing to continue with the credit application. Nevertheless, in some instances, online applications include pre-ticked boxes that the applicant is expected to uncheck if they don't wish to accept additions such as PPI. In such cases, it may be that any PPI claims can be upheld in the courts and monies paid put can be refunded. In some instances, this has run into thousands of pounds, so it's definitely worth checking to see if you were one of the many consumers mis-sold PPI.
Other Forms Of Mis-Selling
If your credit was agreed over the phone or face-to-face, then it was the responsibility of the salesperson to ensure that you fully comprehended the terms and conditions applicable to any PPI and that any such policy was appropriate to your needs. If, as was often the case, the salesperson was working on commission or received bonuses for each PPI policy sold, then the needs of the borrower were rarely taken into consideration. In such instances of systematic misselling, PPI claims are common and it is uncommon for such a claim to fail.
Who Didn't Need PPI?
PPI is designed to cover repayments for credit in certain circumstances and has never been a compulsory purchase in order for credit to be extended to an individual. Due to the widespread nature of the misselling, many people who would never have been able to make a claim under the policy were sold the cover. Such people included the self-employed, the unemployed, retired individuals and borrowers who had a medical condition. In all of these examples, there could have been no valid claim made under the policy, so any cover was automatically superfluous to the needs of the borrower.
The Need To Act Fast
The regulator in charge of PPI claims (The Financial Conduct Authority - FCA) has submitted proposals to introduce a time limit on PPI claims (the proposed date is June 2019), which may mean that thousands of consumers miss out on successfully claiming money owed to them due to mis-selling. Consumer rights organisations such as 'Which' claim that the onus on consumers to make a claim is not cost-effective and should instead be placed on those who did the mis-selling in the first-place. The introduction of a time-limit when so many consumers are unaware that they have been mis-sold a product would be immensely unfair. Whilst the time-limit has not been introduced yet, the need to act fast in order to recover all monies owed cannot be overstated. If you have had any kind of credit in the past, whether that was a bank loan, a store card, a credit card or even car finance, now is the time to check whether or not you were paying a premium for an insurance that you may not have needed.
How Do I Make A PPI Claim?
- Find any and all documentation related to the financial product or service you bought and make photocopies of everything that may be relevant to your claim. This includes proof you've been paying for the PPI insurance policy and making payments towards it.
- Draft a complaint to the company who sold the PPI policy to you. Templates are available online and many banks have forms on their websites. Send any paperwork you think is relevant to your claim and clearly outline why you believe the policy was mis-sold to you.
- You should expect a response within 60 days. If not, file a complaint with the UK's Financial Ombudsman who will send you a questionnaire which you must fill in to help them decide if you've been mis-sold PPI.
Do I Need A Claims Management Company?
There are dozens of claims companies out there promising to help people make PPI claims. You'll have seen them on TV or on radio. You may even have been cold called by one. While it is certainly not necessary to use such companies some people want to avoid the hassle of making the claim themselves. Beware that these companies will normally take 25% of any compensation you receive as a fee (sometimes more). Make sure you find a claims company offering the lowest possible fee and avoid at all costs any companies who ask for an up-front fee. Some of the more dubious ones have gone out of business without reclaiming any money for their customers. Claims companies will often promise that their claims are dealt with more promptly than an individuals claim but there is little evidence of this. The only real benefit of a claims management company is its less work for you to do. If you feel you have been treated unfairly by a claims company you should file a complaint with the Claims Management Regulator here.