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What is PPI?

Payment Protection Insurance or PPI as it is commonly known as, has been sold alongside mortgages, loans and credit cards for many years. PPI is a type of policy designed to cover your monthly loan or credit card payments if you were not able to make them due to illness, accident or redundancy. If sold correctly, these policies can provide borrowers with the protection they were after.

The cost of PPI is normally added to your monthly repayments or is made as an initial single premium, which means that you are paying interest on PPI for the duration of the loan, mortgage or credit card. The total cost you have paid out could quite often be thousands of pounds.

How should PPI be sold?

PPI should only be sold to you after an assessment of your needs has been completed and before you agree to the policy. If this assessment was not detailed enough or was not completed at all, then you may be eligible for PPI compensation. You may also have a policy that is unsuitable for you or that may not pay out if a claim arises.

Changes in the law for the sale of PPI

Recent court cases have emphasised the number of issues that have come up with mis-sold payment protection insurance. The Financial Services Authority (FSA), the former regulator, has already fined some lenders over the mis-selling of PPI including household names like Alliance & Leicester, Egg, Liverpool Victoria and GE Capital. The FSA has, as a result, banned the selling of single premium policies.

The FSA and the Citizens Advice Bureau, like us, believe that there are millions of PPI policies which have been mis-sold.

Mis-sold PPI

Unfortunately, many companies have mis-sold PPI to its customers for whom the policy is not appropriate. PPI was mis-sold in many ways and if any of the circumstances set out below are similar to yours, then you may be able to claim your money back.

  1. Overcharging - in many cases PPI was sold as a single amount at the start of the loan. It was included in the total cost of the loan, so you would be paying interest on it. There could have been other (including cheaper) ways of buying the cover, such as a pay-monthly stand-alone insurance that is not attached to the loan and doesn't attract interest. Interestingly, the FSA banned the selling of single premium PPI in 2009.
  2. Not suitable to you - it is possible that the policy sold to you may not have been suitable. For example, if you already had sickness cover through your employer or if you worked for the NHS, you would not need PPI as you would have received full sickness pay. Also, if you had a pre-existing medical condition, it is likely that you may not have been able to claim on the insurance at all.
  3. Unable to claim - at the time you took out the loan, if you fell into one of the following criteria, you may not have been eligible to claim:
    • Unemployed
    • Self-employed
    • Retired or would retire before the end of the term of the policy
    • A director of your own company
    • On a fixed term employment contract
    • Working less than 16 hours a week
    • A temporary or agency worker
    • Working outside the UK
    • A student - in full time or part time education
  4. Mis-advised - You were told you had to take out the PPI in order to get the loan or credit for which you were applying, or it was not mentioned to you at all and was just bundled with the rest of the costs of the loan.
  5. No knowledge or consent - You have been paying for a policy that you did not realise you had or that you did not want. This may be a regular payment or a one off payment at the start of your loan, credit card or mortgage. If this is the case, you may have been mis-sold the policy.
  6. Insufficient information - You may not have been given all the relevant information before you took out the policy because your loan provider was pushing PPI insurance. Many customers did know that they had PPI but were not told that they could get it cheaper elsewhere if they just shopped around a little bit. Many were also not informed about exclusions in the PPI policy.
  7. Consolidation loans - The reason you were taking a loan in the first place was to reduce the amount you were paying out each month. So it may be that you did not need PPI and this only increased your monthly outgoings.

If any of the circumstances above sound familiar to you, you may have a claim for mis-sold PPI. Ask yourself:

Am I or have I been paying for PPI?

  • Check your loan, credit card, mortgage, store cards or any other finance you have signed up for in the last ten years.Is PPI included on your agreement?
  • Check any loan statement today to see if PPI has been added to your loan?
  • Check your credit card statement, is PPI included on your monthly account?
  • Look out for terms like Credit Card Cover, Payment Protection Policy, Repayment Protection Cover, Accident Sickness and Unemployment Cover or Accident Sickness Cover

Don't worry if you can't find any paperwork, we may be able to get your loan provider to confirm whether you had PPI cover. Please get in touch with us and we'll see what we can do to help.

Even if the company that advised you to take out your mortgage is no longer in business, the Financial Services Compensation Scheme (FSCS) may cover you. This scheme was set up to provide compensation for customers of companies who cannot pay compensation.

What can I do to reclaim mis-sold PPI?

You are only going to get one chance to get it back, so it's important that you put your best foot forward. You can either, claim on your own or you can use an expert like Reclaim Specialists to help. We can't guarantee a pay-out for you or get more money than you would if you claim on your own, or that we can handle the claim faster.

What we can guarantee is a professional, straight forward, honest service which is hassle free for you. To see more about who we are, click here. For our contact details, click here