4 Important Things You Need to Know PPI

4 Important Things You Need to Know PPI

by Rebecca Hall on 24 Feb, 2012

Many people will have noticed an increase in adverts on the TV, radio and internet regarding a product called PPI, offering people who have been mis-sold it the chance to reclaim money from banks and other lenders.

However, a large proportion of those who have seen or heard these adverts may not have fully understood what PPI is, or realised that it may affect them.

For that reason we’ve decided to put together a list to try to help people better comprehend what it means when people talk about mis-sold PPI and reclaiming funds.

1) What is PPI? PPI stands for payment protection insurance, which is a product that is designed to certain debts, such as credit cards, mortgages and personal loans, if the customer was to have an accident, become sick or unemployed or even die. The cover is usually a fixed sum out of your bank account every month.

2) How was PPI mis-sold? – Only certain people are eligible for or actually in need of PPI. However, banks became embroiled in a scandal after it was found they had dishonestly sold the product to customers on a huge scale.

PPI has, for a long time, been extremely profitable for banks, offering them more money than the interest on the loan originally being sold.

The mis-selling involved salespeople telling people the insurance was compulsory, automatically adding the insurance to the original loan agreement, or selling the insurance to people who weren’t eligible for it in the first place. According to surveys, some 40% of those with a policy didn’t realise that they had been paying for PPI.

3) How to check if you’ve been mis-sold PPI – If you have taken out a loan or credit card over the past decade, you should check the documentation that came with your, paying particular attention to the terms and conditions. If you can’t find them, you should be able to request them from your lender. If you have a PPI policy, there will be a mention of something similar to ‘payment insurance’ or ‘payment plan’.

To be able to claim compensation from your lender, you’ll have to prove that you were dishonestly sold the product, so try to remember the conversation you had when taking out your loan or credit card. Was PPI not brought up? Were you told it was compulsory? Were you retired, unemployed or self-employed at the time? If this was the case, you may have a case.

4) Think it’s been mis-sold to you? What can you do about it? – If you think you have been mis-sold PPI, you have a couple of options. Firstly, you can try and reclaim the money yourself, by getting in touch with your bank with a complaint. However, many people end up having to take their case to the Financial Services Authority or Financial Ombudsman after finding it difficult to get a response from the bank, which can take quite a lot of time and effort.

Alternatively, you can use the services of a claims management firm, which will help bridge the gap between you and your lender, dealing with the bank directly and freeing up time for you. What’s more, its employees will often have dealt with many similar claims, and will consequently have experience dealing with big financial institutions on an almost daily basis.

A claims management company can help people who have been mis-sold a policy to make a Payment Protection Insurance claim helping them to get back the money they are owed.

About the Author

Rebecca Hall

Rebecca Hall worked as an independent mortgage adviser for 10 years before turning to financial journalism full time. She has strong links to the CAB advising families on mortgage refinancing.