If you took out any sort of loan in the 1990s or 2000s, chances are you were also sold payment protection insurance (PPI).
There’s also a strong possibility that the policy was mis-sold, in which case you could be entitled to compensation.
But you need to act fast because the Financial Conduct Authority (FCA) has set a deadline of 29 August 2019 for people to complain about the sale of PPI.
If you lodge a complaint after this date, the banks and lenders involved will not consider it.
What is PPI?
A PPI policy is designed to cover the cost of the repayments on a loan, such as a mortgage, credit card or car finance, if you are unable to work, because of redundancy, accident or sickness.
But the policies were often mis-sold as financial institutions tried to generate commissions.
In fact, since January 2011, more than £26 billion has been paid back to consumers who were wrongly sold PPI.
Compensation can add up to big money and is typically made up of a refund of the premiums paid, plus any interest on the premiums if the cost of the PPI was added to the loan.
Some consumers are also entitled to statutory compensation of 8% of any money refunded.
The first step is to check if you have, or have had, PPI. The policy does not have to be in force now, as long as you have taken out PPI in the past.
It’s also worth bearing in mind that the policy might be called loan protection, loan repayment insurance, credit insurance or something similar.
If you can’t find any paperwork, contact your bank or other lender and ask if you have ever taken out PPI.
The FCA has told financial institutions to be as helpful and pro-active as possible in helping customers with PPI queries and complaints.
Reasons for mis-selling
If you have a PPI policy, there is a strong possibility it was mis-sold. The reasons for mis-selling are many and varied, but some of the most common include:
- you were pressured into buying a policy
- the product was not fully explained
- you were told that PPI was compulsory
- you were told that your credit application would be rejected without PPI
- you were unemployed, self-employed or retired when you took out the policy
- the policy was added to your loan without your knowledge or consent
- you had a pre-existing medical condition when you took out PPI.
You might also be able to put in a complaint if you think the provider of the policy earned a high level of commission for the sale of PPI, which was not disclosed at the time.
The FCA considers high commission to be more than 50% - and as the average PPI commission was 67%, many people will have a case under the new rules.
It is also highly unlikely that you were told of any commission, so it’s worth considering a complaint on this basis, even if the policy was not mis-sold.
The new rules come into effect on 29 August 2017 and follow the Supreme Court decision in Plevin v Paragon Personal Finance Limited.
However, you cannot complain about undisclosed high commission if the PPI was sold with a loan that was paid off in full before 6 April 2008.
If you have already made a complaint about the mis-selling of PPI and the claim was rejected, you could put in a new complaint on the basis of undisclosed high commission.
But you cannot make a further complaint if the original mis-selling complaint was upheld and you received compensation.
People who put in complaints since late 2015 should have received a letter from their provider explaining that they would consider undisclosed high commission as part of the mis-selling complaint.
Complain for free
You don’t have to play a claims agency to file a complaint about PPI, you can simply contact your bank or other lender. The process is pretty straightforward.
Some companies post complaint forms on their websites, or you can download a form from the Financial Ombudsman Service.
Lenders that are regulated by the FCA should respond within eight weeks to tell you whether your complaint has been successful, or whether they need more time to investigate.
If you are not happy with the final decision, you can contact the Financial Ombudsman Service – you should do so within six months.
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