How to claim a payment protection refundWhat to do if you've been mis-sold PPI

30 October 2007

A pile of notes and coins.

If you've got a mortgage, have borrowed money or bought something on credit, check whether you're paying for payment protection insurance (PPI) you don't need, Which? warns today.

PPI is sold by many banks and credit card companies and is designed to cover your repayments if you become unable to work due to certain illnesses or injuries, or if you lose your job.

But mortgage and credit card PPI pays out only for a limited amount of time, usually 12 months, while store card PPI often covers only the minimum amount that must be paid each month.

And when sold alongside loans or finance agreements, PPI is often sold as a ‘single premium policy’.

This means a lump sum covering the cost of the insurance is added to the amount you have borrowed, so you end up paying interest on both the insurance premium and the loan.

Mis-sold policies

Now Which? is advising people how to claim back the cost of PPI if they believe it was mis-sold to them.

Teresa Fritz of Which? Money said:‘One of the problems with PPI is that many people don't realise they have it. If you're not sure whether you have PPI, look at the paperwork sent to you when you took out your loan, credit card, mortgage or finance agreement.

‘If you are still unsure, contact your lender or finance provider and ask whether you have PPI. If you find out you have PPI that you never knew you had, this is a good indication that you may have been mis-sold.’

Which? campaign

If you are unsure whether you have been mis-sold PPI, follow this simple checklist. If you can answer ‘no’ to one or more of these questions, then you may have been mis-sold PPI:

  • did the adviser make it clear that the insurance was optional (if this was the case)?
  • did the adviser tell you about the significant exclusions under the policy? For example, the exclusion that says you won't be covered for any pre-existing medical condition?
  • if you took out a loan or finance agreement, did the adviser make it clear that you would have to pay for the insurance up front in a single payment?
  • if you had to pay for the insurance as a single premium, did the advisor make it clear that the insurance cost would be added to the loan and you would be paying interest on it?
  • if your PPI policy expires before your loan or finance agreement does, you'll be paying interest on insurance that is no longer in force.  Did the adviser make this clear?

For more information on how to make a complaint and begin the process of claiming back your PPI, visit the Which? PPI campaign section of our website.