Banks have started pulling the plug on publicising their protection products especially payment protection insurance. The notorious insurance policy that had left millions trying to claim back worth £3,500 of payments continues to plague the UK’s financial industry. To avoid facing the same issues in the future with other financial products, here are three things you need to keep in mind.
Do You Really Need It?
If you’re taking out financing, make sure to check your credit scores beforehand. A check allows you to see if the industry is confident in your ability to make repayments for a new loan or mortgage. Doing so allows you to see if you really need any PPI or insurance policy that repays your financing.
No Specific Brand
If bank employees tell you a specific insurance policy is needed for a financing and your credit scores indicate you have a below-average risk rating, then you must take out a policy. However, the bank cannot specify a policy they offer or any brand they refer to explicitly. A single insurance product cannot qualify all customers in the same way.
Read The Terms and Conditions
Lastly, before taking out a financial protection product, see if the product’s terms and conditions make you eligible to make a claim should you need it. Millions of UK consumers mis-sold PPI were ineligible upon purchasing their insurance. While majority of these cases were due to unscrupulous sales tactics, it is better to be safe than sorry by reading the terms and conditions before leaving a signature.
There are two kinds of claims management companies (CMCs). There are helpful and informative companies that do not force you to use their services and offer useful consultation advice. Then there are others that just want to grab your money from the get-go.
Sometimes, these CMCs would even ask for their part after you successfully received your refunds through a claim you filed by yourself. Here are the steps to avoid that particular issue.
Make No Win No Fee Clear From the Start
CMCs that offer a no-win no-fee basis should make it clear to you from the start that if they are initially unsuccessful with your claim, then they have no right to receive any payment. Upon reading your contract, find these details immediately and sign only if these are present. Keep a copy for yourself as well.
Execute a No-Payment Contract After an Unsuccessful Service
Regardless whether you signed a contract that has the CMC acknowledge they have no claim to your refunds after their unsuccessful rendition of service, have them sign another contract after you officially stop using their service. Once again, make sure to keep a copy for yourself.
Ask The Bank Not To Inform Any CMCs On Your Successful Claim
Lastly, make it clear to the bank servicing your successful complaint that no CMCs should be informed about your success. It is impossible to determine whether they would respect this request. In case they do inform the CMC and the latter asks to receive payment for your successful claim, present the original no win no fee contract and your no-payment contract thereafter.
Treasury Select Committee Chairman Nicky Morgan said that the Financial Ombudsman Service, British Consumer’s final defence against unscrupulous financial products and sales tactics, must present evidence else it is guilty of mishandling PPI complaints in favour of banks.
A Channel 4 undercover journalist team showed that FOS employees giving into stress and huge workloads did not initiate proper detailed investigations, which led to poor decisions for mis-sold PPI claims.
The Ombudsman’s decision on lender and borrower dealings is final and cannot be reversed.
According to Morgan’s letter to FOS Chief Ombudsman Caroline Wayman, the FOS needs to reopen cases “it feels were not decided correctly.” She also asked Wayman for the number of people affected by the improper case handling.
Employees from the FOS said they did not pore over every detail as they should because of the huge number of pending claims they need to address. Most employees fear missing out on pay rises and promotion opportunities because of immense backlogs, leaving them to make half-detailed decisions on their investigations.
The FOS itself said in a statement that the programme can always be improved and a review by the non-executive board to clarify the concerns raised is encouraged.
The Ombudsman receives about 4,000 complaints on a weekly basis. In the past, it had upheld 7 out of 10 complaints in the favour of consumers.
Banks and financial institutions can and will reject valid PPI policies. Even if you have strived to gather enough data to support your claim, financial institutions can shoot down your complaint citing data deficiency on their end. Their claim is unfair, therefore, you can redress these abusive bank behaviours with the following.
Data Access / Credit Score Request
Banks can cite the six-year customer data clause to bypass your activity during your financing’s early days. However, a data access or credit score request can reveal all your activities and show all the repayments you’ve made for your financing.
Speak to the Financial Ombudsman
The Financial Ombudsman can conduct a complaint review and make a final decision on your complaint. However, the complaints processing might be slow because you will resubmit to the FOS your complaint and wait a few more weeks for the results.
Make a Petition
If the bank rejects your complaint despite your evidence that they had mis-sold your policy, then you can make a petition to take the financial institution to court. However, this process may take some time. Therefore, it is advisable that you only use this in dire circumstances or if you have multiple mis-sold PPI policies.