Millions paid in redress
The first six months of 2011 saw £215 million worth of redress paid out for payment protection insurance (PPI) mis-selling complaints. Between May and June alone £102 million was paid out following the dismissal of the industry’s legal challenge to the FSA and the Financial Ombudsman Service (FOS).
Which? executive director Richard Lloyd, says: ‘Over £200 million in six months sounds like a lot, but when you compare it to the £7.4 billion that the banks have set aside to cover PPI mis-selling, you can see that this is just the start.
‘There’s no excuse for banks not to have cleared the backlog of complaints caused by the Judicial Review. Any firms that have not met the 31 August deadline should face tough enforcement action. The FSA should require banks to be more transparent about their complaint handling processes to show that they are improving the way they handle customer disputes.’
Claim back yourself
Claiming back PPI is simple to do, but many consumers are unsure whether they have paid PPI in the first place, whether they were mis-sold it, and what they can do to go about reclaiming it themselves. Claiming directly to your bank is the first course of action, and the high court ruling ordered the banks to contact any customers who have been affected.
Which? has developed a handy PPI tool to help you check your eligibility and reclaim PPI you may be owed. All you need to do is select the company who sold you the PPI, fill in your contact details and answer some questions about how you were mis-sold the product.
If you’re not happy with the outcome you can also complain to FOS. The FOS has received over 200,000 complaints about mis-sold PPI policies since October 2010 and has upheld 3 in 4 cases in favour of the consumer.
Claims management companies
Claims management companies advertise themselves as being able to make the claim on your behalf, for which they take a fee. They often advertise themselves on a ‘no win, no fee’ basis.
With the standard fee for a claims management company typically around 25% + VAT of the total compensation, consumers could pay an average of £825 for something they can do themselves.
What’s more, people who claim back PPI sold with a loan could find themselves owing money to their CMC, even in the event of a successful claim. If the loan is still being repaid, redress often comes in the form of a reduction of the outstanding balance leaving the consumer to pay the CMC’s fee out of their own pocket.