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Millions of Britons have yet to make a PPI claim - here's how to do it for free

Mark Dorman
Millions of Britons could be owed substantial figures through the PPI scandal (Matt Cardy/Getty Images)

Millions of Britons have yet to make a claim for mis-sold payment protection insurance, the financial watchdog has said.

Although some £27bn has already been paid out, the Financial Conduct Authority says the majority of those affected have not yet sought compensation.

About 64 million PPI policies were issued and, while some would have been sold correctly, most were not.

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The FCA says 12 million people have successfully sought recompense – but that means, potentially, tens of millions of others could be eligible.

Banks have set aside £37bn to cover the cost of the largest mis-selling scandal to hit Britain and scores of claims firms have sprung up over recent years promising to ‘help’ consumers get back their money.

But many of these companies charge hefty sums for handling the claims, often taking hundreds or even thousands of pounds off the final settlement as a fee.

What is PPI, what happened?
Payment protection insurance was sold by banks and credit card providers, among others, from the early 1990s as a measure to cover customers should they fall ill, or lose their job, and be unable to make payments on mortgages, loans, credit cards, catalogue cards etc. Many customers were either unaware they had signed up to this extra cost or did not fully understand how they could be paying more each month for something they’d never benefit from.

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So, with the deadline of August 29 2019 imposed for final claims, what should you be doing?
Many consumer websites offer simple template letters and forms for people to send off to their bank or other lender. Which?, for example, says: “There’s no need to hand over 30% of your compensation to a no-win no-fee claims-management company, use our free tool and template letter to start your own claim and keep 100% of the money you’re owed.”

Similar letters are available from MoneySuperMarket and other sites, and most banks and building societies now have dedicated section on their websites for PPI claims.

The FCA itself also has a raft of information on who can claim, what you need and how to do it for free.

I’m not sure I have a claim…
Millions of people who did not want or need PPI, were mis-sold PPI primarily between 1990 and 2010.

The most simple answer is to ask. Such is the scale of the issue, it is more likely that you were mis-sold PPI than it was sold to you correctly.

The onus is not on you to prove you were mis-sold the policy. Even if the policy was taken out decades ago and the paperwork is lost, you should ask and the provider should have a record of the loan.

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If you can trawl through your paperwork and statements, look for phrases like ‘payment cover’, ‘protection plan’, ‘ASU’, ‘loan protection’, ‘retail payment protection’, ‘loan care’ or similar. That will indicate a PPI policy.

Your credit report (through companies such as Experian or Equifax) will also list who you have borrowed from.

What if I have had a claim rejected?
A Supreme Court case, known as the Plevin case, has opened up the possibility for 2.4 million rejected compensation claims may now be able to make a fresh appeal.

The ruling dealt with the case of a financial company’s client not being made aware of a commission being paid when they were sold PPI.

The FCA now says that if the cost of your PPI was made up of more than 50% commission and you weren’t told this, you should get the difference back plus interest.

According to Which?, bank loans with PPI typically had 67% commission and banks almost never mentioned it, so a lot of people are likely to be owed compensation.