PPI Uncovered. Everything You Need To Know
PPI, or payment protection insurance, has been in the news a great deal over the past four years. And with good reason. It now has the dubious title of being the worst financial scandal to have ever hit the UK.
Millions of unsuspecting consumers sought financial help and advice from the people and institutions they thought they could trust — their banks. What too many of these people received instead, however, was tantamount to daylight robbery.
Rather than getting the help they went for, many unsuspecting customers were duped into taking out an insurance policy that was useless to them.
In April 2011, the High Court ruled that the banks and lenders who mis-sold PPI must repay what they unfairly took. They were also instructed to pay their victims compensation on top. Banks and lenders have now been issuing PPI refunds since then, and the PPI saga shows little sign of coming to an end anytime soon.
The Skinny on PPI
PPI was sold to borrowers alongside credit products. It was meant to help repay some or all of their borrowing if they lost their income for a period of time. This loss of income could have been by way of:
- An accident
- Becoming unemployed
- Through sickness
- Through death
The most commonly sold types of PPI were:
- Single premium policies on unsecured loans (around 48% of all PPI policies sold)
- Credit card PPI (around 36%)
- Regular premium policies on loans or mortgages (around 15%)
PPI was not a simple product. It had complex pricing (premiums) and benefits, and detailed policy conditions. Some of those detailed policy conditions included (and will be explored in greater depth later):
- Eligibility criteria
- Exclusions from cover
- Limitations to benefits
Such details meant that PPI was suitable for some consumers but not suitable for all. As such, firms selling the product should have exercised particular care when trying to sell it.
Unfortunately, all too often they failed to exercise the necessary care with the result being the PPI scandal that is still being cleaned up now.
The Banks’ PPI Refund Bill
At the time the PPI scandal first broke, it was estimated that the total bill for the banks would be £4.5 billion. Looking back, that figure is almost comical now.
As of July 2015, the total amount paid out so far for mis-sold PPI already topped £20.5 Billion. A further £5 billion is currently set aside for anyone still seeking redress from the product.
While the banks hope the additional £5 billion they have set aside will be enough to tie off the whole mess, it may well not be. We’ve seen PPI provisions increase several times in the past already, and it could quite easily happen again before the scandal can be declared ‘over’.
How Did PPI Come To Be Mis-sold on Such a Large Scale?
Would you be surprised if the main reason PPI was so widely mis-sold was because of profit? For the firms who sold it, PPI proved to be a highly profitable product in general and particularly profitable when sold in its single premium form.
PPI sales grew rapidly through the 1990s and peaked in 2004. Around 45 million policies were sold between 1990 and 2010, worth £44 billion in premiums. We don’t really know the full ins and outs of how it came to be so widely mis-sold, but it seems that profit was the underlying factor.
The Financial Conduct Authority (FCA) had already given the banks many warnings and issued fines before the high court ruling in April 2011. But those fines and warnings weren’t enough to change firms’ behaviour for the simple reason that they were raking in so much profit.
As well as banks themselves raking in such huge profits, individual salespeople were also lured into poor practices and ethics by way of commissions. It seems that the lure of a bigger paycheque at the end of the month overrode any sense of duty these people should have had to their customers.
The net result is that millions of consumers were duped into taking out PPI that they either didn’t need, didn’t know about or that was useless to them.
Was My PPI Mis-Sold?
Given that PPI was mis-sold on such an enormous scale, you have every reason to wonder if you may be one of the victims.
The first thing for you to ascertain is whether you actually have PPI. It may sound like a stupid statement to make, but not when you consider that one common tactic for mis-selling the product was to add it on without the customer’s knowledge or agreement.
So the first thing you should check is where you have PPI and how many separate policies you actually have. If you have records of all your finances and paperwork, this shouldn’t be too difficult to do. But what if you no longer have your paperwork?
There are ways to gather the information you need in order to claim PPI, which we’ll look at in the next section.
Here’s How To Check If You Were Mis-Sold PPI
The first thing you’ll need to do to check if you were mis-sold PPI is to find out if you actually have it. A common problem in this area is that if lost or discarded paperwork along with lost or forgotten account numbers.
I No Longer Have My Paperwork
If you’ve already discarded your paperwork or you never had it, there are a couple of ways to get the information you need.
The first way to find out if you have PPI and if it was mis-sold is to run a credit check on yourself. Whenever you apply for a loan or any type of finance, this will be the first thing your bank or lender does. A credit check will provide a full report of what finances you’ve had and which of them had PPI attached, along with other important information.
For your purposes, you simply want to know if you’ve ever been sold payment protection insurance. Once you know if you’ve ever had it, you can then start the process of thinking back to the point of sale, which will help you decide if it was mis-sold or not.
First Things First: Locating PPI Through a Credit Check
To run a credit check on yourself, you can use either Noddle or Credit Expert by Experian. Noddle is free all the time and Credit Expert is free for a trial period, after which it is a paid service. You can always sign up with Credit Expert, use the service and then cancel the trial to avoid a monthly fee.
Here are the steps to running a credit check and finding PPI:
- Sign up for the service you wish to use
- Follow the instructions for running a credit check
- Download (and print out) your credit report
- Go through your report and locate every type of finance you’ve had that has PPI attached. Important: When looking for PPI, be aware that it often went by other names, such as Loan Cover, Loan Protection, Accident and Sickness Cover (ASU) etc.
- Make a note of all the finances that have PPI attached.
- Cast your mind back to the point of sale for each instance of PPI and follow the next set of instructions.
Forgotten Account Numbers
Before we move on with the discovery process of whether you were mis-sold PPI or not, it’s worth mentioning the common problem of lost or forgotten account numbers. If this applies to you, one way around it is to follow the steps outlined above.
Once you’ve done that, you simply contact the bank or lender that issued the PPI and ask for copies of the paperwork, which will have the account number on it.
Now Determine if Your PPI Was Mis-Sold
So now you have your finance history and know which finances had PPI attached. The next step is to ascertain whether you believe it was mis-sold or not.
Given the scale of the PPI scandal, it can be easy to think that all PPI was mis-sold, but it wasn’t. PPI — in the right circumstances — is a worthwhile and valuable product to have. The problem is that many people were sold it when their circumstances didn’t warrant it.
Below is a summary of the ways PPI was often mis-sold. Think back to the point of sale for each PPI policy you have and see if any of them apply to you:
– Employment Status Made You Ineligible
There are several ways PPI was mis-sold in relation to a person’s employment status. If you can say yes to any of the following being applicable to you at the time the PPI was sold, then it’s likely yours was mis-sold:
- You were self employed
- You worked as a ‘temp’
- You worked less than 16 hours per week
- You were a contractor (as opposed to full time employed)
Another factor to consider is if your employment status was about to change. If you knew at the point of sale that you would be leaving your work imminently, your PPI may have been mis-sold.
– Too Old or Too Young
One criterion to be eligible for PPI was your age at the point of sale. If you were younger than 18 years of age or older than 65, you were automatically ineligible. If that is the case for you and you have PPI, it was mis-sold.
– Health Conditions
If you had a pre-existing health condition at the time you took out the PPI, it may have made you ineligible for the product. The salesperson should have checked this with you. If they failed to do so, yours was probably mis-sold.
There are certain health conditions that are not covered by PPI, such as back pain or depression.
– You Were Already Covered Elsewhere
Some insurance policies already cover a person in the event that they lose their income. It could be as part of your home insurance or even an insurance policy that comes as part of your employment package.
If you were already covered for loss of income elsewhere, there would be no need to have PPI. If this applies to you and the salesperson didn’t make you aware of it, you can claim your money back.
– Poor Communication From The Seller
While it’s listed as poor communication, the sad truth is that it was often blatant lies and misleading information that constitutes many PPI policies as being mis-sold. Some salespeople told their customers that PPI was compulsory in order to secure the loan they were seeking. This is not true; PPI is an optional product, not compulsory.
In other instances, there was sometimes a box that indicated you wanted PPI and which was already pre ticked. If you weren’t made aware of the box and your right to untick it, then you were probably mis-sold.
Another area where poor communication was the cause of PPI being mis-sold is with regard to your rights. For example, many people were led to believe that they had to take out PPI with the same lender that supplied the finance. That’s not true and you were entitled to shop around for a better deal.
If any of the above examples apply to you, it’s likely your PPI was mis-sold. If that’s the case, you can claim back what you paid for the policy plus compensation.
Is It Too Late To Claim PPI?
No it’s not. Many banks and lenders involved in the scandal have tried to get a cut off date implemented for claiming PPI. So far, that request has been denied, but it could happen at some point in the future.
If you have PPI on any of your finances and you believe it was mis-sold, it is probably in your best interests to get your claim started sooner rather than later.
What’s The Best Way To Claim PPI?
This is quite a common question and, as with many things in life, there isn’t a one-size-fits-all answer. It ultimately comes down to you as a person and what’s going on in your life.
Here are some things to think about when considering claiming PPI and the best way to do it:
- How good are you with paperwork and figures?
- How busy are you?
- How organised (or not) are you?
There are essentially two ways to claim PPI: the first is to handle the claim by yourself and the second is to have a PPI claims company such as us handle the claim for you.
There’s no right or wrong way to claim; it’s really dependent on your circumstances. Here’s a summary of the pros and cons of claiming PPI yourself versus claiming PPI through us.
Claiming PPI by Yourself
Probably the greatest advantage to claiming PPI by yourself is that whatever your bank awards you in a refund is the amount you get to keep.
Any downsides to claiming PPI by yourself are largely subjective. While many PPI claims run quite smoothly, there are also many that don’t. If your PPI claim is one that doesn’t run smoothly, the questions you need to ask yourself revolve around how you feel about your ability to handle the challenges and any stress they might bring.
One area where claiming PPI by yourself can potentially be a big challenge is if you have lost or no longer have your account numbers. If you don’t have your account number for the PPI policy you wish to claim on, you will need to follow the steps outlined above for running a credit check on yourself (First Things First: Locating PPI Through a Credit Check).
Claiming PPI without account numbers through us is a much simpler process, as we’ll look at now.
Having Us Claim PPI For You
If your PPI claim turns out to be one of the ones that isn’t straight forward, it’s not going to be a problem for you. Any undue stress that self claims may or may not bring are avoided because we handle the entire process for you.
We complete the majority of the PPI claim form for you before sending it out to you to sign. Signing the PPI claim form acknowledges that the information is correct and that you have given us authority to claim for you.
If your claim turns out to be quite involved, whereby quite a bit more admin time than normal is required, it won’t affect you. We’ll handle the entire process and will keep you updated each step of the way, advising you where your claim is at. Other than that, though, you won’t need to do anything else.
Start Your PPI Claim Without Account Numbers
One of the greatest benefits to having us handle your PPI claim is if you no longer have your account numbers. We have negotiated special agreements with many banks and lenders that allows us to start PPI claims without account numbers.
Depending on which bank you wish to claim against but don’t have account numbers for, the information required is slightly different. In all cases, you will need to provide:
- Your full name
- The address you were living at when you took out the finance
In addition to those two requirements to starting claims without account numbers, some banks require one additional piece of information, which is:
- One account number
Fear not, though.
The account number you provide can be from any account you have with that bank or lender. For example, if you do your regular banking with that bank, you can simply give the account number of your current account.
With the above information provided, your bank will then search through their entire database for all instances of PPI you may have ever had with them.
In many cases (but not all), these banks will also use your information to search the databases of their sister companies too.
These agreements have exponentially speeded up the PPI claims process for our clients.
It’s not a downside as such, because good service is something we’ve all been paying for since time immemorial. That said, there is a fee for the service we provide, which is a percentage of the final refund figure you receive, assuming your claim is successful.
If it turns out you weren’t mis-sold PPI, then you won’t pay a penny for any work we would have done. A fee is only payable on claims that are successful.
Which Banks Do We Have These Agreements With?
Unfortunately we can’t say. When we negotiated these agreements, one of the conditions of the agreements was that the information wouldn’t be published.
We can tell you that at the time of writing this (August 2015), we have negotiated agreements like these with 51 different banks and lenders. So there’s a good chance that your lender is one of them.
To find out for sure, you can call us and we’ll let you know that way.
Are These Agreements Available To Individuals Claiming PPI by Themselves?
Unfortunately not. If you wish to claim PPI by yourself and you don’t have your account numbers, you will need to go another route.
The best way to do this is to follow the steps outlined above in the section First Things First: Locating PPI Through a Credit Check. Once you have run a credit check on yourself and found where you have PPI, you will then need to contact your bank or firm that issued the PPI and request copies of your paperwork.
When you receive your paperwork, you will have the account number written on it. From there you just complete your PPI claim form as usual and submit your PPI claim to your bank.
How Much Will I Win Back?
If your PPI claim is successful, the amount you win back will be dependent on the type of PPI you had and how much you paid for it. As such, it is impossible to say in this article what your refund figure will be.
The industry average PPI refund is £2,750 per policy.
To get a better idea of how much you are likely owed by your bank, you can follow the tutorial for calculating your PPI refund figure.
I Bought PPI Through a Broker and He’s Now Gone Bust
This is one of the trickier types of PPI claims that we have handled many times. They’re not impossible to win a refund on, but they do require far more effort than an ‘average PPI claim’.
If you took out PPI through a broker that has now gone bust, it is best to contact us directly to have a chat. Each case is completely unique and it is therefore impossible to give concrete advice in an article.
You can contact us for advice on this matter and you are not under any obligation to pursue your claim further if you choose not to.
I Need Help With The PPI Claim Form
The PPI claim form is the first step in claiming back your money from mis-sold PPI. You will need to complete one form for each claim you wish to make.
If you are stuck with completing it, you might find the answers you’re looking for in another article about the PPI claim form.
Have More Questions or Need Further Help?
We’ve tried to make this article on PPI as comprehensive as possible. However, you may have questions that haven’t been answered. If so, please drop us a line and let us assist you.
Contacting us does not obligate you to pursue your PPI claim through us if you choose not to.
You can call for free on 0800 840 7290 or alternatively, pop your details into the short form above and we will call you.