Payment protection insurance (PPI) is an insurance product sold alongside credit cards, loans and many other finance agreements. It’s meant to ensure that payments are made if the borrower is unable to make them due to sickness or unemployment.
But huge numbers of policies were mis-sold because the policyholders would never have been able to claim on the insurance.
If you had any kind of credit product, such as a consumer loan, store card, credit card or mortgage up until 2006 you could have been mis-sold PPI (payment protection insurance). Some mis-selling may even have taken place after this date.
The deadline for submitting a mis-sold PPI claim to your bank or financial provider was agreed by the banks and financial regulator and came into effect at 11.59pm on 29 August 2019.
You can still apply if you’ve experienced exceptional circumstances, for example:
Exceptional circumstances claims will be assessed on a case-by-case basis, so make sure you include as much information as possible when you make your claim.
Keep all of your compensation, and send your extraordinary circumstances PPI claim direct to your provider.
If your provider agrees that exceptional circumstances led to you missing the deadline, it will progress your case.
Your claim will be assessed by your PPI provider, who has up to eight weeks to resolve your claim from the date you made it. But you could get a refund as early as one week after your initial claim.
If your provider takes longer than eight weeks to get back to you or it rejects your claim, you can appeal to the Financial Ombudsman Service for free. You have up to six months from the date your provider rejects your claim to take your complaint to the FOS.
Regardless of whether you made a claim before or after the deadline, if your claim is rejected, or if you’re not sure whether the amount you have been compensated is correct, all is not lost.
1. If your complaint is rejected or you're told the bank needs more information You can either take your complaint straight to the free Financial Ombudsman Service or you could use the provider’s ‘subject access request’ form, which can be requested for free.
This form should give you all the information the provider has about you and the products you’ve had with them, for at least the past 6 years. You should receive a response within 40 days.
2. If you think the amount of compensation is unfair You should check the factors that can affect the amount you get. For example, did you make a claim on the policy, or do you owe the bank money?
You should also check the assumptions the bank has made. If your bank needed to make any assumptions to calculate your offer, it will have been explained in your letter.
In most cases if you think anything is incorrect or that you have been unfairly treated, your first port of call should be your bank.
There is no cost involved, and as many as two in five PPI claims referred to the FOS are successful. The process is straightforward but due to the volume of PPI complaints it can be slow.
If your complaint is upheld, then the company that sold you the policy should do its best to put you back in the position you would have been in if you had never taken PPI out in the first place.
This is to make up for the fact that you haven’t been able to use the money during the time you held the PPI – after all, you might have saved or spent it elsewhere.
Understandably you want to know how much you’re owed, but the sums involved can be tricky. Regulators require your PPI provider to put you back into the financial position you would have been in if you had never had PPI.
There are three sums that make up how PPI compensation is calculated.
You have up to four years after the end of the tax year in which you received your payout to reclaim tax on mis-sold PPI.
Which? money advice experts told us: 'If, like millions of us, you’ve made a successful PPI claim, you probably noticed that the payment you received was made up of at least two parts - the PPI repayment and statutory interest on this amount of 8%.
'You should also have noticed that the interest element of the payment has been taxed at a rate of 20%. But what you may not have realised is that lots of us are entitled to reclaim the tax we’ve paid on any compensation since April 2016.
'Since 6 April 2016, everyone has had a Personal Savings Allowance (PSA), which allows most people to earn £1,000 in savings interest tax-free (or £500 for higher rate tax-payers).
Since then, savings interest has generally been paid gross, but PPI payouts continue to 'have 20% tax deducted.
'PPI payouts are taxed in the year you get paid, so even if the policy was mis-sold in, say, 2001, it’s the tax rules in the year you get the payout that counts. So unless you’re lucky enough to have masses of savings and therefore have already used up your PSA, you should be able to reclaim the tax you’ve paid on any interest up to £1,000 (or £500 for higher rate taxpayers).
'Unfortunately, your refund won’t happen automatically. Most people just need to complete a form R40 to apply for a refund. If you do self-assessment, you should include the PPI interest and any refund will be calculated for you.'
Most of us who had PPI were mis-sold the product so long ago it’s difficult to remember what happened or if you even had it or not. So don’t be afraid to put in a claim
Regulators published an official lists of reasons you could have been mis-sold PPI and if your answer is ‘no’ to one or more of the following questions you were almost definitely mis-sold PPI. But take this list with a pinch of salt as most people don’t remember how they were sold a financial product 15 to 20 years ago.