Summary: This article explains the steps to take when considering applying for a refund of mis-sold payment protection insurance (PPI).
In the last few years, more and more people have successfully reclaimed PPI payments, as a result of the gross mis-selling of PPI products by lenders. As a result, there has been a rise in what are known as ‘Claims Management Companies’ who allegedly specialise in getting the individual their money back, for a fee usually in the region of 30% of the amount reclaimed. However, it is easy for an individual to reclaim the money themselves, provided they are willing to invest a bit of time.
Was PPI taken out?
This should be a fairly straightforward process. Assuming the individual still has the original paperwork for the credit (such as the loan agreement), it should state whether or not PPI was added. If this original paperwork is unavailable, details may be found on a repayment statement. Failing that, the individual should contact the provider of the credit who should hold details of any PPI on file.
Was the PPI mis-sold?
Unless the individual was fully aware and in full agreement at the time of getting the credit that PPI would also be applied, and details of the policy were explained in full before any agreement was signed, it is possible that it was indeed mis-sold. Some of the key considerations are below:
• Did the advisor ‘recommend’ that the PPI should be taken out?
• Did the advisor explain any pertinent exclusions? (for example exclusions for certain medical conditions)
• Where the PPI was added to the loan, were the interest payments on the PPI explained?
• Was the PPI taken out, despite it not being suitable? (for example, if the individual was unemployed at the time of taking out the PPI, they would be unable to claim)
• Did the PPI cover end before the end of the term of the credit? If so, was this explained?
If the answer to any of the above questions is yes, then it is possible that the individual could reclaim their PPI payments.
How to make a claim.
Rather than use a Claims management company, who can charge a fee, an individual can reclaim their PPI payments themselves for free. The first step it to write to the lender that sold the policy. There are many standard templates available on the internet, or alternatively, the Financial Ombudsman Service has a form that can be completed and sent to the lender (FSA PPI Claim Form). This form can also be used when making a complaint directly to the Financial Ombudsman. It is important to include all relevant information and copies of any evidence, such as the original loan agreement. Always ensure a copy of the letter is kept. The lender then has 8 weeks to respond with either the refund, or a written explanation of why they require more time to consider. If no satisfactory response has been received after 8 weeks, the complaint can be taken to the Financial Ombudsman.
Taking the complain to the ombudsman.
Using the PPI claim form (found in the link above) an individual can make a further complaint to the ombudsman if they do not get a satisfactory response from the lender within 8 weeks. They will then be able to take further action to speed up the process by contacting the lender n the individual’s behalf. If they do not get a satisfactory response, they can decide to uphold the complaint.
Reclaiming PPI when in an IVA
If an individual is currently in, or has recently completed an Individual Voluntary Arrangement (IVA), and is considering reclaiming PPI payments, it may be worth speaking to the IVA supervisor for advice as any money reimbursed may have to go towards the IVA.
(information sourced from the www.fsa.gov.uk)