What is PPI & How can you reclaim PPI for free?
Payment Protection Insurance otherwise known as PPI has been in the news a lot recently and a flood of companies have come onto the market claiming they can get you £1000’s if you get them to reclaim PPI that you may have been mis-sold. But what is PPI and how can you reclaim PPI for free? Let’s find out.
What is PPI?
Payment protection insurance is designed to protect a borrower by paying their mortgage, loan or credit card repayments in the event that they might lose their job, fall seriously ill or have an accident that prevents them from working.
Is All PPI Bad?
In theory PPI isn’t a bad idea and can serve a purpose in the right circumstances. The problem is that PPI has been systematically mis-sold for years now by banks and other credit providers with huge cash incentives offered to employees who sold the insurance!
Was I Mis-Sold PPI?
PPI isn’t suitable for everyone, for example if you’re self employed, have recently started a new job, or have had previous problems with illness etc you may not be covered by the policy that has been sold to you. If this was not pointed out then you have likely been mis-sold PPI!
Also you may have been told things like “it will increase your chances of getting the loan if you take out the PPI” or “you may be declined the loan if you don’t take out the PPI”. These statements are completely false and are classic examples of PPI mis-selling! What’s worse is that you may not have even known you had been sold PPI as many sales people just added it to loans and hoped you wouldn’t notice! The best thing you can do if you feel you may have been mis-sold PPI or to check if it was added without your knowledge is to take the following steps!
Step 1 : Establish if you have ever had or currently have PPI.
You can do this in a number of ways. If you still have it you can look back through your old paperwork for all your loans, mortgages and credit cards. If you don’t have all the paperwork and can’t remember what credit you’ve had you can check your credit report online for free here. Your credit report lists all credit arrangements that have been active within the last 6 years which is handy because to reclaim PPI the account has to have been active within the last 6 years. This means you could be eligible to reclaim PPI even if your loan was taken out over 6 years ago, as long as it didn’t end over 6 years ago!
Once you have the details of any loans, mortgages or credit cards you can request the paperwork from the credit provider. Lenders have a legal responsibility to provide you with this information though they can make a charge of £1 for active accounts and upto £10 for closed accounts.
When you get the paperwork look for any mention of an insurance fee or product that will cover your payments if you lost your job through accident, sickness or unemployment. It may be called ‘payment cover’, ‘protection plan’, ‘ASU’, ‘loan protection’, ‘retail payment protection’, ‘loan care’ or similar. If unsure, ask the lender. If you find something on your paperwork you didn’t know about, investigate it!
Step 2 : Send a letter to the bank
Send a letter to the bank or credit provider stating that you believe you have been mis-sold PPI and want your money back plus interest on the money. You can get a template letter from the link at the end of this article.
Step 3 : If Needed Go To The Ombudsman!
Since the banks recently lost a high court ruling they have set aside billions to cover payouts of mis-sold PPI so it’s become a lot easier to reclaim your money! If for some reason they refuse your claim and this is their final decision you are then able to take your claim to the Financial Ombudsman Service who will then look at the case for you and make a final ruling!
How Much Could You Get?
You could be due £1000’s from a mis-sold policy. The average payout seems to be around £2500 but there have been cases where the payouts have been in the £10000s. It all depends on how big the loan was and the type of loan it was. PPI costs on a mortgage for example are likely to be much more than on a small loan! So don’t delay! If you were mis-sold PPI you are entitled to your money back plus interest!
What about these companies that say they’ll reclaim it for me?
Don’t be frightened to do it yourself! There are many companies out there offering to do it for you but they take around 30% of your money for the privilege. It may sound daunting but the whole process is so easy once you’ve sent the first letter to your bank. Now that the banks lost the court ruling they are unlikely to contest your PPI case and will likely just give you your money back!