Consumers are being encouraged to make their claim compensation for payment protection insurance (PPI) as the official deadline nears.
In June, the Financial Conduct Authority (FCA) urged consumers to “jog their memories” by visiting their website to check if they had been mis-sold PPI.
As many as 64 million PPI policies were sold in the UK in the 1990s and 2000s and the total amount of compensation paid to people over the scandal now stands at more than £35bn.
To make sure you’re not caught out ahead of this month’s final deadline, here’s everything you need to know about PPI and how to make your claim:
What is PPI?
PPI was an insurance scheme meant to cover repayments for those who found themselves in a sudden circumstance, such as suffering a work accident or falling ill.
It was often added on to personal loans and business loans, credit cards, store cards, mortgages and various types of credit.
PPI became controversial as it was widely mis-sold. Banks and lenders often sold PPI to customers without explaining what it covered.
People often felt pressured to take it only to later find out that it was unsuitable for their circumstances. For example, PPI doesn’t cover you if you are self-employed or retired.
When is the PPI deadline?
The PPI deadline is August 29 2019, 11:59pm.
PPI claims must be received by the firm you’re complaining to on or before this date or they won’t be considered.
How far back can PPI claims date?
As long as the PPI was active within the past six years, you can still reclaim.
For older policies, you can still try and reclaim but your chances of success are lower.
How do I check if I have PPI?
It’s a good idea to check documents you signed when you took out a mortgage, loan or credit card as this is where any information about PPI will usually appear.
PPI may also go by other names, such as loan protection, credit insurance, loan repayment insurance, ASU (accident, sickness and unemployment) insurance, account cover or payment cover and will appear on statements.
How do I know if I’ve been mis-sold PPI?
Not all PPI is bad, so it’s good to check before you make a claim.
As money expert Martin Lewis explains: “Everyone who has got or had a loan or credit card in the last six years should check their policy now to see if they have this insurance. If you do, and were told it was compulsory, if you were given employment cover but you were self-employed, or if you were not asked about a pre-existing condition, you are likely to be a mis-selling victim.”
The Financial Conduct Authority also has a checklist on their website to help you determine whether you’ve been mis-sold.
How do I claim PPI?
You can make a claim yourself for free.
In most cases, the financial business (such as a bank or other business provider) that sold you the PPI is the same one who provided your loan or credit product, so you should complain directly to them.
The company must respond to your complaint within eight weeks.
In your complaint letter, you should include:
- your full name
- your date of birth
- your phone number
- your PPI number
- when you bought your PPI policy
- when you took out the loan or credit product that the PPI covered
- your circumstances at the time you bought PPI, such as employment status or the company you worked for
You should also briefly explain the reason for your complaint. Further guidance on how to claim can be found on the FCA.
How much money can I claim?
The amount you can claim back will depend on your circumstances, but in theory, you should get back all your premiums plus interest.
In recent years, the average payout has totalled £2,000.
What happens if my claim is unsuccessful?
Being rejected won’t prevent you from reclaiming.
Many banks have been fined repeatedly for failing to properly deal with complaints. What’s more, the Financial Ombudsman upholds more than 60% of PPI cases in consumers’ favour, so it’s always worth trying again.
If your claim was recently rejected, you can go straight to the Ombudsman.
Under new regulations set by the FCA, you can now also claim on the grounds that over 50 per cent of you PPI bill went on commission to the lender. This will entitle you to a refund.
Unless you were rejected in the last six months, you’ll need to start your claim from scratch with your bank.