The UK’s biggest ever financial scam wasn’t done by dodgy blokes in back alleys but by bankers in pinstripe. Yet now the regulator, the FCA, has given in to banks demands to protect their balance sheets and put a deadline on reclaiming PPI.
Over £20 billion of PPI has been repaid so far, and I suspect it’ll be £30bn before we’re done. You may be thinking you’ve heard this before. After all, I first warned about PPI in 2000 and published my first reclaiming guide in 2006.
Everyone who has or ever had a loan, credit card, store card, mortgage, overdraft or catalogue debt, should sit up and take note of these five facts:
1. Now, just having had PPI means most were mis-sold.
2. The deadline is 2019, but act ASAP to beat the queue.
3. Don’t assume ‘it’s not me’ – even if you said ‘no’ to it.
4. Don’t pay to reclaim. Free tools can do it for you.
5. A typical payout is £3000 - so it’s worth your time.
For full help and my free reclaiming tool go to www.mse.me/ppi (I’m very proud over 6.5m of my free template letters have been downloaded, getting people an estimated up to £5bn back). Here’s a quicker Q&A . . .
Q. I’ve heard of it, but what exactly is PPI mis-selling?
PPI stands for ‘payment protection insurance’ an insurance policy sold to cover a year’s repayments on debts in case of accident, sickness or unemployment and there’s nothing wrong with that.
Yet for years banks saw it as a cash cow and systematically mis-sold this insurance – as it made them more profit than the loan itself. The banks lied that it was compulsory or would get you a cheaper rate, gave it to people who didn’t need it, couldn’t use it, and even added to some people’s loans after they’d said ‘no’ to it.
Reclaiming means you get back all the money you wrongly paid it (and interest). I continuously hear of success stories such as Liz, who emailed me: “After your information on the mis-selling of PPI, I have received confirmation from them that I was mis-sold PPI to the tune of £10,370 and they will refund this to me.”
Q. When is the deadline?
The regulator, the FCA has said the last day you’ll be able to put in a claim for PPI mis-selling is 29 August 2019. While that sounds a long time away, from this August it’ll spend millions promoting the cut off, so the system is likely to get clogged up, therefore go quickly to avoid being stuck at the back of the queue.
Q. I had PPI but what counts as mis-selling?
Typical examples include; they lied that PPI was compulsory or it would cut your loan costs, sometimes it was added without asking or even after you’d said ‘no’.
They had a duty to ensure it was suitable for you. For example, you were self-employed but got unemployment cover or you had a past medical condition they didn’t ask about. See my full mis-selling checklist at www.mse.me/ppi#checklist.
Q. Why are you saying “Now just having had PPI means most were mis-sold?”
The regulator also confirmed that from 29 August this year, a new category of mis-selling called ‘Plevin’ (named after a court case) comes into play. It says that if more than 50 per cent of the cost of your PPI went to pay commission to the lender from the insurer and you weren’t told it, then you’re due the extra back, plus interest.
As the average commission for loan PPI was 67 per cent and banks almost never mentioned it, this means most people who had PPI are likely due money back.
Lenders will be forced to write to 1.2 million people who were previously rejected and may now be owed due to Plevin. Though ridiculously it’s not ordered them to send these letters to everyone whose commission was over 50 per cent, so most will still need to take action.
Q. How do I know if I had PPI?
You have to check, and as you can go back as long as you like (some reclaim on 20 year-old long closed loans) don’t assume you didn’t.
One way it was mis-sold was to add it without asking or even adding it after you’d said ‘no’. Like Clairebee who tweeted: “@MartinSLewis just got £500 ppi back...thanks Martin genuinely didn’t think we had any...1st hol in 2 years will be booked today!!”
Check your old loans paperwork: It may have been called PPI or something like ‘payment insurance’ or ‘accident or sickness cover’.
If you don’t have your paperwork, you can request it from your lender going back up to six years.
Q. What if I can’t remember my lender?
Q. What if I haven’t got paperwork?
If you haven’t got your paperwork you can ask the lender for it (going back six years). If it refuses you can force it to give it to you under the data protection act. If it’s more than six years and you don’t have the paperwork, sometimes there’s little you can do.
Q. How do I got about reclaiming, do I need a company?
No. There’s no need to pay a claims firm 30 per cent of your payback (often £1,000s) to do this. You can do it easily yourself with free tools online or even just calling your bank. Use mine at www.mse.me/ppi or www.which.co.uk has free help too.
Claims firms don’t have any better success rate than doing it yourself, with one exception. If the bank rejects you, and they feel you were mis-sold, then go to the free www.financial-ombudsman.org.uk which can adjudicate independently.
So if you’re rejected (and that happens) and think you were mis-sold, don’t be put off, just continue to the financial ombudsman yourself. Over 50 per cent of people who get rejected by their bank get ruled in favour by the Ombudsman – that’s where real justice often lies.