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What is PPI?
If you take out a loan or another type of credit, Payment Protection Insurance is a policy that protects you from having to continue making payments if you are unable. For example, if you become ill, are made redundant, or have an accident that prevents you from working. However, many PPI policies have been sold in a way that regulatory bodies like the Office of Fair Trading and the Financial Services Authority have deemed unfair, and many people in the UK are receiving refunds for PPI they have paid for in the past.
I've been told I can make a claim...
If you receive a phone call, email or SMS from an agency offering to help you reclaim your PPI, the most frugal response is to ignore them. These agencies will charge a fee to reclaim any Payment Protection Insurance that has been mis-sold to you. While this may be money you didn't know you could claim, you don't need an agency to get it.
How to Claim
The following tips explain the steps you need to take to receive the full claim you are entitled to.
1. If you have a taken out a loan or credit card in the past and you suspect you may have been mis-sold PPI, the first task is to make sure. Check any paperwork you received, call or write to the company, and find out whether you were charged for Payment Protection Insurance with your loan.
2. If you are behind in your repayments for the loan, or if you have other debts with the same lender, your case is a bit more tricky. Consider hiring a legal representative who is willing to take on the case on a no-win no-fee basis. Otherwise, start budgeting to pay off your remaining debt first, and you may get the money back later in the form of a PPI refund.
3. If you don't already have all the paperwork, write to your lender and ask for a copy of your loan agreement and any related terms and conditions. There may be a small charge for this, especially if the account is already closed, but it shouldn't be more than £10.
4. Just because you paid for PPI, doesn't mean it was mis-sold. You may have a case if one of the following statements applies to you:
- Your creditor didn't make it clear that the PPI policy was optional
- You weren't told about the cooling off period
- Your creditor implied or stated that it would cost you more without the insurance
- You were led to believe the insurance was required to take out the loan
- You were led to believe taking the insurance helped with your loan application
- You were pushed into taking the PPI, or felt you couldn't refuse
- Your creditor asked you to sign up for PPI without explaining what that was or what it was for
- You didn't even know you had PPI, it was never brought up
- You were sold unemployment cover when you were already unemployed or retired
- Your policy excludes existing medical problems and you weren't asked about or informed of this
- You already had payment protection cover via your work or your partner's policy
5. Call the lender and explain you believe that PPI was mis-sold and you would like a refund. Sometimes this is all it will take, but don't be disheartened if you are told that you do not have a case.
6. Complete this form, and send it to your creditor with a cover note explaining that you would like a refund for mis-sold PPI. Send it recorded and keep a copy of the letter.
7. If you do not receive a response within eight weeks, or if your claim is rejected, you need to contact the Financial Ombudsman. This is not a quick process, and it may take up to two years to get it settled. Contact them through their website, or by phone on 0800 0234 567 and ask them to take on your case. Have your details ready.
8. Fill out the Ombudsman complaint form and send it to them along with the questionnaire you sent to your creditor, and any other evidence and relevant paperwork. Always send letters recorded delivery and keep copies for your own records.
9. If the Ombudsman turn down your case and you believe your complaint is valid, you can ask for a formal decision to be made by an official ombudsman rather than an assigned adjudicator.
10. If your claim with the Ombudsman seems to have been mishandled or if there are unnecessary delays, request that a senior manager review your case.
11. If you still don't feel satisfied with the Ombudsman's service, you have the right to go to an Independent Assessor. The assessor will not reverse and Ombudsman's decision, and should only be contacted about poor service.
Be aware that if you received your loan or credit before January 2005, then the Financial Ombudsman might not have jurisdiction, especially if the lender is not a bank or building society. If in doubt, call the Ombudsman to check and if necessary, ask what other schemes or associations might be able to help.
Whether your PPI claim is successful or not, you can keep track of the income and spending on all your bank accounts and credit cards using Money Dashboard free money management software.