The British Bankers’ Association has given up its legal fight over the mis-selling of PPI, and decided not to appeal against a court challenge against new mis-selling rules.
Millions of people affected by PPI mis-selling could now be entitled to compensation. Barclays Bank announced this morning it is setting aside £1billion to cover compensation for mis-sold PPI and Lloyds Banking Group, which owns Lloyds TSB, Halifax and Bank of Scotland, also has £3.2billion ready for customers’ claims.
It is estimated that the PPI mis-selling scandal could cost the banking industry as much as £8billion in total.
How do I know if my PPI policy was mis-sold?
The rules around how lenders can sell PPI have changed – it can no longer be sold at the time you take out a credit card, loan or finance package (such as those you sign up for is you buy new electrical goods or furniture). In the past however, that was commonly the time PPI would be pushed.
The reason why there has been such an issue with this insurance product is that there are lots of exclusions which often weren’t explained. As a result many people paid for a policy they wouldn’t be eligible to make a claim on.
Even now, you may not be aware of whether or not you’d in fact be eligible to make a claim on your PPI policy.
It’s important to check the terms and conditions, but common exclusions include those who aren’t in work. Therefore if you were unemployed, a student, house wife/house husband or carer when you took the policy out, it won’t cover you. Also, PPI doesn’t cover the self-employed.
Some medical conditions which may prevent you from working are also commonly excluded, such as stress and back pain.
If the terms of the policy weren’t explained to you, you have a case for claiming compensation.
If you think you were mis-sold PPI on a loan, store card or credit card payments and you’re thinking about making a claim, there are two options for you to consider:
Option 1 is wait for the bank to contact you about compensation. Before the court ruling was made it was always up to the customer to make a complaint and to ask for compensation, but since the ruling last month, banks are now required to contact PPI customers who may be eligible for compensation.
The second option is to be pro-active about your claim and not wait for the bank or lender to get in touch. Write to the bank or lender and explain to why you think you were mis-sold PPI. They should then get back to you to let you know whether you have a viable claim or not.
If you haven’t heard back from them after eight weeks, or you think the bank or lender has made the wrong decision, then it may be time to take your case to the independent Financial Ombudsman Service, which has welcomed the new ruling.
You can visit the Financial Ombudsman Service website, or you can contact the service on 08000 234567.
Chief ombudsman Natalie Ceeney said: "It's very good news that the banks will not be appealing the High Court's clear-cut judgment, which endorsed the ombudsman and FSA's approach to PPI complaints. We are pleased that banks will now be dealing with their customers' complaints.
“Consumers should come to us at the ombudsman if they're unsure about what to do next. Meanwhile we will be working with the banks, over the coming weeks, to ensure that consumers' complaints are dealt with fairly and promptly."