Hi --- If they told you the loan was dependent on you taking out PPI then they have contravened FSA guidelines in which case you have the right to seek the returns of the premium and all the interest if they have applied the cost of the PPI on top of your loan.
Write a letter Recorded delivery to the company explaining it was forced on you asking for a refund. There’s no need to specify the amount (unless you know how much you want to ask for) as the lender will do this for you, just explain that you think the insurance was forced on you, and that you are writing to complain and you want your money back.
Being forced to buy a PPI policy in conjunction with a loan does not breach FSA guidelines. But the FSA says that fact does not exclude borrowers from making a mis-selling complaint to the Financial Ombudsman, who assesses whether the way the policy was sold was fair and reasonable.
Banks and lenders who subscribe to the banking code agree they will not force customers to also buy their payment protection insurance, but they can insist on them having some form of PPI. You must first contact your lender in writing. The Financial Ombudsman will not look at your claim unless you have first exhausted the complaints procedure of the firm you are in dispute with.
Suggested template letter
The Complaints Department
[Lender’s address]
[Date]
Dear Sir/Madam,
Ref – policy number
I believe I have been mis-sold a payment protection insurance policy and would like to request a full refund of my premiums, plus interest paid.
I took out a £xxx loan/credit card at your [branch name] branch on [date] and also bought a payment protection policy which would cost me an extra £xxx over the life of the loan. [The name of the salesperson who sold me the policy is …] The total amount of my premiums plus interest is £ xxxx.
When I took out the loan, I was told that my application would be refused if I did not also buy a PPI policy. The Financial Services Authority’s advice to consumers is that, while it does not breach FSA guidelines, a borrower should not be refused a loan if they choose not to buy an insurance policy.
Possible additional paragraphs – include any which apply to you
[I also told your salesperson that I had adequate insurance cover through a separate income protection policy.]
[I said I did not need the PPI as my employer provides a generous illness and redundancy package.]
[You are not allowed to make PPI a condition of taking out the loan unless you include the costs of PPI in the quoted interest rate, which you did not do.]
[In forcing me to buy this policy, you have also breached paragraph 8.6 of the Banking Code, to which you are a signatory.]
I do not believe being forced to buy this policy as part of the loan was a fair and reasonable obligation as I did not need this insurance and said at the time of taking the loan that I did not want it.
I am requesting a full refund of all my insurance payments, plus interest, which total [£ xxx].
If I do not receive a favourable response from you I will pursue this claim through the Financial Ombudsman.
Yours faithfully,
[Your signature]