I think I’ve been mis-sold PPI – what should I do?

The payment protection insurance (PPI) mis-selling scandal has cost banks billions in compensation payouts so far. But with a deadline approaching, there are still thousands of claims yet to be made.

What is PPI?

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.

In 2005, Citizens Advice issued a so-called super-complaint to competition watchdogs about what it described as a ‘protection racket’, starting a series of events that led to the compensation payments to consumers and sales of some types of PPI being banned.

Most people don’t know if they were mis-sold PPI or not. Regulators have recognised this and now recommend that if there’s a chance you had PPI, you should make a claim ahead of the 29 August 2019 deadline.

Make a PPI claim

If you can’t remember who your lender was, check your credit file, which you can do free of charge.

What is the PPI claim deadline?

The Financial Conduct Authority (FCA) has confirmed that the deadline for making a claim will be 29 August 2019.

This means that if you want to make a PPI claim it must be received by the firm you’re complaining to on or before 29 August 2019.

Some banks have written to their customers, telling them that they may have been mis-sold PPI and should submit a claim.

Anyone who has received one of these letters has three years from when they received the letter to make a complaint. 

As a result customers who receive a letter are warned to act promptly, particularly if it is an older policy, to ensure their complaint does not fall foul of any time limit.

Who do I make a PPI claim against?

You can make a PPI claim against the company that you bought the financial product with.

In most cases this will be your bank, but PPI was also mis-sold with financing agreements, store cards and credit cards. 

There is also the added confusion that some companies have been bought by others.

Thankfully, the FCA has a helpful list on its website that you can search to find out who to contact to ask if you had PPI.

PPI mis-selling checklist

Here are some of the ways you may have been mis-sold PPI. If your answer is ‘no’ to one or more of the following questions, then you may have been mis-sold PPI.
If the insurance was optional, was that made clear to you?

  • Did the adviser tell you about any 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 upfront in one single payment?
  • If you had to pay for the PPI as a single payment, did the adviser make it clear that the insurance cost would be added to the loan and that you would be paying interest on it?
  • Single-premium PPI insurance normally only lasts for five years. If your loan or finance agreement was for longer than this, did the adviser make it clear that the insurance would run out before you had finished paying for your loan or finance agreement? The adviser should also have told you that you would continue to pay interest on the insurance premium, even after the insurance expired.
  • If you bought PPI after 14 January 2005, did the adviser try to persuade you to take it out by saying something like :‘We strongly recommend that you consider taking out PPI?’ If so, the sale counts as an ‘advised’ sale, and they should have issued a ‘demands and needs statement’ to show why a particular policy has been recommended, and why it’s suitable for you. If they didn’t, this is grounds for complaint.
  • You can complain if you think your provider earned a high level of commission from your PPI and this was not made clear to you when you bought it.

What does Plevin mean for PPI compensation?

The Financial Conduct Authority (FCA) has put rules in place for how firms should handle claims in the wake of the Supreme Court ‘Plevin’ ruling, which looked at cases where providers earned a high level of commission from PPI and customers weren’t told about it.

The FCA now says that if the cost of your PPI was made up of more than 50% commission and you weren’t told this, you should get the difference back plus interest.

But these rules will only officially come into effect on 29 August 2017.

PPI providers will be required by the regulator to write to all previously rejected complainants who are eligible to claim in light of the Plevin case, to explain the new grounds for claims.

As bank loans with PPI typically had 67% commission and banks almost never mentioned it, this means millions more people are owed billions more pounds.

We believe that if you’ve had a PPI claim rejected in the past, you should resubmit it to your PPI provider and can ask them to check for undisclosed high commision, as realistically there’s little to no way you could have possibly known about the amount of commission on the product you were sold.

It’s important to remember that you’ll only be compensated the percentage difference over 50%, so if your product was 67% commission you’ll get the 17% back. In many cases this will probably mean compensation in the hundreds, rather than the thousands.

How much PPI compensation will I get?

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.

  1. First, the actual cost of the premium, this could have been added as a regular monthly charge on your loan or credit card repayments.
  2. Second, how much interest you were paying on the premium. This can add up quickly, especially  if you had a product with compound interest.
  3. The third and final sum is simple interest of 8% a year on the combined premium and interest for the time you had the policy.

When did PPI mis-selling start?

There's no specific start date,  the problems of mis-selling have been around for a long time. Claims generally start on policies mis-sold from the 1990s and in some cases even earlier.

The financial regulator started fining PPI companies in 2006, but it wasn't until 2011 that we started to see compensation payouts happening on a larger scale.

How can I find out if I had PPI?

If you can’t remember who your lender was or whether you were mis-sold a PPI product, you can check your credit report, which you can do free of charge.

You’re looking for something that may be called along the lines of ‘loan protection’, ‘payment cover’, ‘protection plan’, ‘retail payment protection’ or ‘loan care’. This isn’t an exhaustive list and it could have gone under several other names. We recommend that you make a claim if you see any product that

How long can a PPI claim take?

Your PPI provider must resolve your claim within eight weeks. If it fails to do so you can take your claim to the Financial Ombudsman Service (FOS).

The FOS is free to use, but it’s worth noting that, due to the volume of PPI complaints, this process can take a while. In some cases, it may take more than a year to decide. Use our guide on how to take your complaint to the FOS.

Can I make a PPI claim on behalf of a deceased relative?

A claim can be made for Payment Protection Insurance that had previously been mis-sold to a deceased relative, as an assessment of whether they were mis-sold to will still have to be made.

The claim will need to be handled by the executor of the deceased’s estate. It will help speed along any claim if you will need all of the relevant paperwork related to the mis-sold PPI.

Should I use a claims-management company?

Claims-management companies (CMCs), also sometimes called ‘claim handlers’, sprung up fast in the wake of the PPI mis-selling scandal. 

They offer to handle your PPI complaint in exchange for a fee. Which? strongly advises that you consider your options carefully before deciding to use a CMC. 

It doesn’t cost anything to make a PPI claim direct to your provider, and you’ll keep 100% of your compensation. You can use our free PPI tool and template letters to do this.

Some firms may offer to help you make your claim for which they will usually take a cut of any money you’re awarded. This can be as much as a third of your compensation, and in that case you would lose £1,650 of a £5,000 compensation claim.

You don’t have to use these firms to make a claim but if you do, remember to check the following:

  • The potential costs and benefits of using a claims-management company (CMC)
  • The terms and conditions, including fees, before you sign any contract
  • Whether or not the company is regulated by the Ministry of Justice or by a professional body (the Law Society, for example) and will have to meet certain professional standards.

Can I complain about a CMC?

If you feel like you've been let down, the legal ombudsman accepts complaints about claims-management companies. 

Read our advice on how to complain to an ombudsman.

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