Now that UK banks have agreed to set aside billions of pounds to pay back customers who were missold Payment Protection Insurance (PPI), consumer groups say reclaiming money should be easier. Here are the key points to note when claiming:
● Is there any limit on compensation?
No, but claims made via the Financial Ombudsman can only be enforced up to £100,000.
● How far back can I go with my complaint?
The rule of thumb is that providers will look into policies sold up to six years ago, or policies sold up to 10 years ago to customers who were only made aware of the problem three years ago.
But, as PPI is known to have been widely missold, anyone who started a policy before 2005 could still have a claim.
● Can I complain about more than one policy?
Yes, and if the policies were with the same provider then details can be written in a single letter to the provider and ombudsman. However, if the policies were taken out with separate providers, they will need to be submitted as separate cases.
● What if my bank has ignored my complaint?
Customers who complain to a bank and receive no reply after eight weeks, or a reply they disagree with, can contact the ombudsman. But, given the backlog of complaints banks face, it would make sense to wait a few weeks longer.
● What will I get back?
The Financial Services Authority wants banks to put customers who were wrongly sold a PPI policy back into the situation they would be in if they had never taken out the policy. That means paying back the premiums plus any interest paid on them, plus interest on this sum for the intervening period at a rate of 8 per cent. The average sum paid out so far is £2,750.
● I took out a policy with a credit card. What will I get back?
The repayment sum from the missold policy should be added to the balance of the credit card, plus interest for each month that the card would have been in credit had the policy never been taken out.
● I tried to make a claim on my PPI policy and was turned down. Can I claim?
Yes. If you were missold the policy and then could not claim on it, the provider should either pay back the cost of the policy, plus interest, or pay the value of the claim plus interest from the date it was made.
● I would have taken out insurance but was missold my policy. What compensation will I get?
If you would have taken out PPI, then your provider should pay back the sum you paid on your policy, less the amount that an alternative policy would have cost you. If the loan is still active, then your repayments should be restructured.
Case study: PPI misselling – ‘Nothing was separated and explained’
Paul Fielder, 33, is one of hundreds of thousands of customers who unwittingly took out a payment protection insurance (PPI) policy along with a personal loan.
In 2006, Fielder, who runs a property company in Hull, borrowed £25,000 to refurbish one of his properties. The loan was to be repaid over 10 years at a rate of 12.9 per cent.
“I didn’t realise at the time that the PPI was included. Nothing was separated and explained – it was a matter of ‘Here’s the total sum for the loan, these will be your monthly repayments, sign here’.“
Not only had PPI been included in the loan, the company also failed to ask him if he had any medical condition that would have excluded him from claiming on the policy.Fielder only found out that he had a PPI policy when a friend mentioned media coverage of the issue a year ago.
“I called the loan company and found that the monthly repayments I’d been making of £488.98 included nearly £130 for PPI,” he said.
Fielder contacted Brunel Franklin, the claims company, which arranged for him to receive full compensation for the cost of PPI, plus 8 per cent interest for the payment period. In total, he received just under £7,600.
“I don’t feel animosity necessarily towards the banks, but it was a bonus to have that cheque arrive in the post,” he says. “I used the money to buy my girlfriend an engagement ring, so it’s happy endings all round.”
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