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Consumer Council Guide to PPI Mis-selling - 24/04/2012

Guide to Payment Protection Insurance (PPI) mis-selling. How to claim and why there's no need to use Claims Management Companies

What is Payment Protection Insurance (PPI)?

PPI is an insurance policy taken out alongside a loan or credit card to cover against loss of income, illness or some other reason why you would be unable to make repayments.

Mis-selling

PPI covers against loss of income and must be sold under the correct guidelines. In some cases they were sold to self-employed people who would not have been able to claim, to borrowers who were wrongly told that taking PPI was a condition for being granted their loan, and to those who did not even realise they were being sold PPI.

High Court ruling on PPI

In April 2011, the British Bankers' Association (BBA) failed to overturn Financial Services Authority (FSA) rules that force banks to contact and compensate consumers who were mis-sold PPI to cover loan and credit card payments. The court has ruled that banks will now have to compensate customers for PPI mis-selling from 2005 – and in certain cases even earlier than 2005.

Letters from Banks (March 2012)

Banks are starting to write to millions of customers explaining that they might have been mis-sold a payment protection insurance (PPI) policy some time in the past.

These letters must be written in clear, jargon-free language. They should also outline why the customer may have been mis-sold and could be entitled to redress, what the customer should do to respond to the firm, the time limits involved and the need to act promptly.

How do I claim?

As well as the banks writing to their customers, consumers can also proactively contact their bank if they believe they have been mis-sold PPI. You should:

1) Check the paperwork for previous loans and credit cards to find out if you took out a PPI policy. If you don’t have the paperwork, contact your bank or credit card provider and ask for a copy of the policy.

2) Check the details of your PPI policy:

· Did you realise at the time you were buying this insurance?

· Were you told you had to buy the PPI policy?

· Did it really cover you in the first place? (Self- employed people, for example, are not covered by PPI)

3) If you feel you have been mis-sold PPI, make your claim. The Financial Ombudsman Service (FOS) has template claim letters available to download.

The Financial Ombudsman Service also has a PPI questionnaire on their website. This form will help you record all the information you need in order to complain to your bank.

How long will it take?

Your bank will have eight weeks (longer in some cases) to respond to your complaint. If you do not hear from them within this period or do not receive a satisfactory outcome, contact the Financial Ombudsman Service.

What if I am not happy with the response I get from the bank?

If you are not happy with your bank's response, contact FOS on: 0800 023 4567 (free for landlines) or 0300 123 9 123 (free for mobile-phone users who pay a charge for calls to numbers starting 01 or 02) or email:complaint.info@financial-ombudsman.org.uk

PPI Claims Management Companies

These are companies who will charge a fee to help you with your PPI claims. They can charge a set fee upfront or a percentage of any claim returned to you. If you believe you are entitled to a refund on PPI it is easy to complete the process yourself, without using a Claims Management Company. Simply download the template letter from the Financial Ombudsman Service or ring them on the numbers above. They can take forward your claim for you, for free.

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