Martin Lewis has called banks "immoral" for attempting to get a cut-off point for compensation on mis-sold PPI. We show you how to make a claim now.
Customers mis-sold payment protection insurance (PPI) may wish to file their claim for compensation as soon as possible after it emerged that banks were pushing for a cut-off date.
It said it would consider the banks’ approach but would agree only if it was convinced that it was “in the interests of customers”. The banks have already set aside about £13bn in compensation and are keen to draw a line under the payouts.
The Financial Ombudsman Service, which adjudicates on claims, is already struggling through 1,000 PPI complaints a day, as well as 3,000 telephone enquiries. It is now warning that customers may wait more than a year for a decision.
Putting a deadline on claims would be controversial. By law, consumers have six years to lodge a complaint about a financial product but are granted another three years to do so if they become aware that they have been mis-sold.
“This is a disgraceful proposition from the banks,” said Martin Lewis, the founder of MoneySavingExpert.com. “Yet it acts as a salient warning for anyone reclaiming PPI to do it now, just in case. We raised a similar caution about reclaiming bank charges. When the door was wrongly shut on that, many who missed the boat kicked themselves.
“The banks are supposed to have written to people telling them that they’ve been mis-sold a few have, but for many we just hear delay and delay. If they want a deadline as soon as next summer, that’s immoral.”
PPI policies are designed to cover debt repayments for borrowers who suddenly lose income through unemployment, illness or accident, and most are sold alongside personal loans, mortgages and credit cards. The scandal lay not in PPI itself but in the irresponsible way in which it was sold, with some banks pushing the product on people who would never have been able to make a claim.
Other providers failed to tell customers about exclusions, while some borrowers were coerced to take PPI out, either being told that it was compulsory or having it added without them realising.
How to get your money back
If you are one of the thousands of consumers filing PPI complaints, you could be in for a long wait. New figures show that due to a surge in payment protection insurance (PPI) disputes, consumers could be waiting more than a year for a verdict from the Financial Ombudsman Service (FOS).
According to the Ombudsman, over the last three months, it has received an average of 1,000 PPI complaints and up to 3,000 telephone enquiries every day.
However, don't let the lengthy wait put you off making complaint if you delay you could miss out.
It is estimated that as few as one in five eligible customers have actually reclaimed for mis-sold PPI, and this is no doubt making the banks nervous.
“This money was wrongly taken from people, due to systemic selling and on some occasions, downright deceit,” said Mr Lewis. “That went on for over a decade. People should have at least as long as that to get their money back."
PPI is the most complained about product of all time with well over half a million complaints made to the ombudsman to date. The second highest is mortgage endowments with around 300,000 complaints so far.
“It’s extraordinary that we’ve received over 500,000 complaints about PPI and despite these record numbers, this mis-selling scandal shows no sign of slowing,” said chief ombudsman, Natalie Ceeney.
“While it’s good news that more people know that they can come to the ombudsman without paying a third party to make their complaint, it’s clear that unless the banks sort out their complaints quickly and fairly, people will only face increasingly longer waits for justice.”
How do you know if you are eligible for compensation?
Those who have had PPI on a personal loan, credit card or mortgage may have a legitimate claim. For instance, if you were unaware that you were taking out a payment protection insurance policy and you did not actually want it. It may be that you do not know whether you have paid for payment protection insurance. If this sounds like you, then look carefully at any paperwork or check with the company who sold you the loan.
Another reason you may be eligible for compensation is if the policy was not properly described to you, if you didn’t understand it or if it was unsuitable for your needs. For example, if you are a contract, freelance or seasonal worker you would have been unable to make a successful claim on a number of PPI policies. Or there are exclusions for instance, with medical conditions that mean you would never have been able to claim under the policy. Similarly, if you have a job with a comprehensive benefit scheme, such as 12-months sick pay for those in the Armed Forces or civil servants, you may be entitled to a claim.
To make a claim yourself is easy. You need not rely on a claims management company who sends you texts or calls you with promises of a cash payout. These companies do not have any access to your records so do not how much compensation you may be due and they all charge a hefty fee often as much as 30pc if your claim is successful.
While you have the option to call the lender to ask for your money back, a formal letter is normally best. For free template letters or help to start your claim, use either Which.co.uk or Moneysavingexpert.com/ppi. Alternatively, call the ombudsman on 0800 023 4567 (0300 123 9123 for mobiles), who can often answer your questions.
Send the letter recorded delivery as there is a time frame in which a lender is required to deal with your claim and ensure you keep a copy of your complaint for your records.
How much you win is entirely dependent on your individual circumstances. For instance, a person who was given a single-premium loan that they have paid off will have a much clearer breakdown of their compensation than someone with a credit card, or another with a range of loans that have been consolidated over the years.
Many consumers find it difficult to calculate how much they are due. The rules state that banks are required to put you back in the position you were in before you took the insurance and should pay you the full amount of premiums, any interest you have paid on what was charged and interest of 8pc.
But what if you no longer have any paperwork? Finding out how much you are owed can be complicated especially if you do not have adequate records. But with the average claim around £2,750, it is worth doing your homework.
If you do not have the premium information or reference numbers for the loans or credit cards for which you are claiming, you can contact your lender to ask for a copy of your credit agreement under the Consumer Credit Act. It must comply, but it can charge you £1.
For closed accounts, you can submit a subject access request to the bank. Under the Data Protection Act 1998, you have a legal right to access all the information held about you by an organisation and your lender must respond within 40 days. Once you have received the information from your lender, you should be in a position to submit your claim. It is helpful to submit copies of your loan or credit card agreement with your claim form, but remember to retain copies for your own records.
A subject access request costs £10 and you will need to include all the credit cards and loans you have held with the bank. You should include your full name, date of birth and current address as well as details of the address you lived at when you took out the loan or card. It is a good idea to send your letter by recorded delivery and to keep a copy.
The bank’s reply will outline how much you have paid and the number of premiums and allow you to calculate accordingly.