After a High Court judge rejected a challenge from the banks over new rules covering payment protection insurance - which covers missed repayments on credit cards, loans and mortgages in the event of illness or unemployment - the compensation trail has intensified. Three million Britons who may have been missold these plans could be due average £1,500 refunds.
If you think you’re among them, don’t use an agent to seek out the cash. Though a host of no-win, no-fee claims companies have sprung up offering to deal with PPI refunds, they won’t be able to get you more compensation despite taking a 30 per cent cut.
How do you know if your PPI was missold?
Consumer group Which? says any customers who weren’t told the insurance was optional will have a case. Equally, the seller must have told you about particular exclusions, like pre-existing medical problems, and have advised you that the insurance would have to be paid for at the point of purchase.
“Single premium PPI insurance normally only lasts for five years,” Which? adds. “If your loan or finance agreement was for longer, did the adviser make it clear that the insurance would run out before you finished paying for your loan? The adviser should also have told you that you would continue to pay interest on the insurance premium, even after the insurance expired.”
If, in a PPI purchase after 14 January 2005, the adviser used persuasive language like, “we strongly recommend that you consider taking out PPI”, the sale should have come with a ‘demands and needs statement’. If not, that’s another potential cause for complaint.
The first step is to complain to your bank. They should respond within eight weeks: if they don’t, you can then take your complaint to the Financial Ombudsman Service (FOS) (0800 023 4567; financial-ombudsman.org.uk). Nearly 90 per cent of all those who took their PPI compliant to the FOS’s free service last year received a decision in their favour.