Reclaiming Missold Payment Protection Insurance
How to Claim PPI Compensation After Being Missold Loan Insurance
Nov 7, 2009
A BBC news report, “Crackdown on Misselling of PPI” (BBC News, Oct 2009) describes how the Financial Services Authority (FSA) are having to tackle poor sales practices by lenders.
An FSA mystery shopper reported that lenders regularly failed to outline the finer points of the loan agreement and in some cases did not make it clear that a PPI had been attached to the loan. As a result, the Financial Ombudsman Service (FOS) has been inundated with complaints from customers who have been misled in this respect.
Furthermore, the Competition Commission found that consumers were being overcharged for their PPI covers by over £1.4 billion per year. This would appear to breach the FSA’s initiative “Treating Customers Fairly.”
Has the Customer Been Missold PPI Insurance?
If the following applies, the consumer may have been mis sold the loan agreement and may be able to claim back the PPI costs, part of the loan, or in some cases, have the debt written off.
- If the consumer was not made aware that the PPI cover had been attached to the cost of the loan; if it was not made clear of its cost or that interest would be charged on the cost of the PPI.
- If the PPI is inappropriate to the customer’s needs, for instance, redundancy cover is unsuitable for a consumer who is unemployed, self-employed or retired.
- Again, if the cover does not meet the needs of the customer regarding an existing medical condition or previous injury.
- If it was not made clear to the customer of any other exclusions that may be relevant to the customer.
- If it is implied that the cover is compulsory with the loan agreement, or if it is sold in a coercive or persuasive way.
Claiming Back a Payment Protection Policy
The credit consumer who has been missold a loan agreement has nothing to lose by chasing up the matter. According to the FOS, cases rarely need to go to court. So, if the consumer suspects a misselling of a loan and does not wish to continue with the policy, the following simple steps can be taken in recouping the money:
- Send a template letter to the loan company (Copies can be downloaded from Money Saving Expert in the PPI section) stating that the customer believes the policy had been missold, and to request a refund. Be sure to write to the relevant person. If the company is regulated by the FSA, the Financial Ombudsman will have power to judge whether the lender has acted fairly or not.
- If the loan company rejects the complaint, the customer may write again, reiterating the previous letter and threatening to take the matter to the Financial Ombudsman. The lender at this stage may try to offer a settlement. If this does not seem high enough, the customer may formally reject the offer.
- If after eight weeks, there is no satisfactory resolution, taking the case to the FOS is the wise route. The FOS provides an online application form for such complaints. It is a free impartial service and is able to establish if the lender has acted fairly.
How to Make a Claim for Missold Loan Insurance
The consumer has little to lose by making a claim against the misselling of a loan. Only perseverance is required. But if the lender is not regulated by the FSA, the financial ombudsman will be unable to help. An alternative route can be taken via the following free debt counselors:
- The Citizen’s Advice Bureau
- Association of British Insurers
- Finance and Leasing Association
Alternatively, the customer may consider the option of dispensing with a PPI.
References
Money Saving Expert “Reclaim PPI Loan Insurance” (Martin Lewis, Oct 2009)
BBC News “Crackdown on Mis-Selling of PPI” (BBC, Oct, 2008)
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