It may seem confusing at first because most claims management companies marketing their services to consumer would say “claim your PPI refunds now.” Sometimes, this interchanges with “claim your mis-sold PPI compensation today.” When you make a claim, they tell you that you can get both refunds and compensation, making things confusing for everyone.
What Are PPI Refunds?
The amounts consumers have repaid in the last few years for a PPI policy they are ineligible to use banks must return in full amounts. A full amount means the complete value of the policy during the time it was purchased.
If it was purchased during the 90s, the PPI’s original total during the time is what the bank needs to repay.
What Are PPI Compensation?
In addition to the amounts banks need to repay are compound interest rates for financing that includes PPI as a feature or perk. As the PPI’s value increases with every missed repayment, the amounts of interest increases the banks must calculate to ensure that the complete refund reaches the customer.
PPI compensation is then calculated by finding the 8% compensation amount from the total PPI refund value. The 8% compensation is multiplied depending on the number of years the PPI was paid for. If the amount was paid for five years as an example, the equation is 8%x5= PPI compensation.