Have you been mis-sold payment protection insurance (PPI)? If so you're not alone - around 1,500 PPI complaints a day were registered in the first six months of 2012! We explain how you can reclaim PPI.
If you took out a loan, credit card, finance agreement or mortgage, you might have paid thousands in insurance that was over-priced and that you couldn't even claim on.
Many people have found themselves in this position, and complained to the Financial Ombudsman Service (FOS) about it. The good news is, FOS data reveals that 71% of the PPI complaints they received in the first half of 2012 were upheld in favour of the customer.
PPI is supposed to help you and your family pay your loan or credit card repayments if you suffer accident, illness or redundancy.
However, policies attached to all sorts of debts have been mis-sold, since they have contained huge numbers of exclusions and terms that have not been properly explained to people, and they have been pushed on customers with no analysis of whether they actually need it.
You may have read about how to reclaim PPI from other sources, but I've written a lot of complaint letters using many similar techniques, and successfully sued my bank before, so here's how I'd go about reclaiming the premiums:
1. Check your paperwork
Firstly, you need to look at the paperwork you've got to see if any insurance payments show up on the statements.
2. Write to your lenders for more information
It might be that you paid the whole premium up front though, and your lenders might have already cancelled the policy, so just checking your latest statements might not do any good.
You might even have binned your statements, although it's usually best to hold them for at least six years after the statement date or until the entire debt is repaid, whichever is latest.
You could write to your lender's head office asking for details of any insurance premiums you've paid in the past on any of your credit cards, loans or mortgages with them, quoting any relevant reference or account numbers.
State that "this is a subject access request under section 7(1) of the Data Protection Act 1998”.
You'll probably be charged £10 for this request, which is the legal maximum the lender can charge. You could enclose the cheque with the letter to save time, writing a sentence explaining the purpose of the cheque in the same letter.
3. Have you been mis-sold any insurance?
You could well have a case to reclaim PPI if:
- It wasn't made clear that the insurance was optional
- You weren't told about exclusions that are important to you (e.g. pre-existing medical conditions)
- The representative who sold you the policy actually recommended it to you and didn't issue a proper 'demands and needs' statement explaining why
- It was a single, up-front payment (most likely on a loan or car-finance agreement) and that wasn't made clear to you
- It wasn't made clear to you that the cost would be added to the loan and you'll have to pay interest on it
4. Write to your lender demanding a refund
On receiving the information and affirming you have been mis-sold to, write to the lender again. This time, you write with the total PPI amount paid, saying the reason or reasons why the lender must repay you – using the appropriate ones for you from the bullet list above.
State that you expect it to refund your PPI and all interest and charges paid on it within 14 days, or you will complain to the Financial Ombudsman Service.
The lender could well stall or even vigorously deny your request, but this is still a step you must follow if you want to reclaim PPI.
5. Complain to the Ombudsman
If it doesn't answer on time, complain to the Financial Ombudsman Service.
If it does, but it rejects, stalls or delays your claim, write to it again saying you don't accept that, and ask for a dispute deadlock letter within 14 days. Once you receive it, or if it doesn't come, complain to the Ombudsman.
The Financial Ombudsman Service is a free service that can force your lender to pay back all the insurance premiums, and the interest and charges that you have suffered as a result.
If you have suffered financial hardship, or stress or inconvenience, it could order the lender to pay extra.
You're not guaranteed to win, but the Ombudsman is currently finding in favour of PPI customers in roughly 90% of cases. If you do lose, you don't have to pay the bank or the Ombudsman anything.