How to make a PPI claim

There are still potentially hundreds of thousands of people who have not made compensation claims for payment protection insurance (PPI) who may be entitled to do so.

Many people are put off by what they see as the difficulty of putting together a claim and because they may be missing documents to use as evidence.

However, banks have recently agreed to simplify the process of making a claim after coming under pressure from the government and consumer groups such as Which? and MoneySavingExpert.com who together have launched a campaign to try and “demystify” the process and encourage individuals to make their own claim rather than relying on claims management companies who take up to 25 per cent of the compensation.

Which? and MoneySavingExpert.com

The investigation by the two groups found that there was a “significant variation” in the amount and quality of PPI information available from providers.

They claim that of the £10 billion now set aside by the banks for PPI compensation only £3.5 billion has been repaid to customers.

Which? and MoneySavingExpert.com have put pressure on the government to provide better regulation of claims management companies (CMC’s).

Martin Lewis from Moneysavingexpert.com said: “PPI reclaiming is big money for many and so people are naturally intimidated by the process and worried by small things.

Sadly many unnecessarily pay thousands in claims management fees, when a simple question like 'was this insurance definitely PPI?' stumps them.

“That's why the banks need to make it easier and simpler for people to claim directly from them, providing their records more easily, and clarifying basic questions.”

The PPI saga came after many banks and financial services providers sold PPI alongside credit cards and loans. In many cases consumers were mis-sold these products and they would have been invalid if they had tried to use them.

The latest set of financial statements from many of the main protagonists, such as the Royal Bank of Scotland (RBS), Barclays and Lloyds, show that with extra provisions the total set aside to pay in PPI compensation is set to breach £10 billion.

The rise of CMC’s

The huge sums involved have spawned an industry of CMC’s who promise to get individuals compensation with ease. However, some companies are making false claims, adding to the cost for the banks involved, which are likely to be recouped at the consumers expense.

Many firms charge up to 25 per cent, plus VAT, despite Which? and MoneySavingExpert.com’s efforts to show customers how they can do it themselves easily.

In the last financial year, 69 per cent of PPI claims referred to the Financial Ombudsman Service (FOS) came from CMC’s. this is down from the previous year when it was 76 per cent. Between 15 and 20 firms were highlighted as being responsible for most of the bogus claims.

Claiming against CMC’s

In a new development, people who think they have been let down by CMC’s will be able to appeal to the Legal Ombudsman from 2013, which has the power to overrule and award compensation if appropriate.

The chief Legal Ombudsman, Adam Sampson, said: "This is great news for the public and consumers as we have significant powers of redress to help protect them."
"We are confident we can support the claims management regulator to improve standards across the industry."

Richard Lloyd, said:"We want a ban on upfront fees and cold calling, and for CMCs to be required to publish online all of their terms and conditions, fees and charges.

"Far too often consumers are being ripped off by unscrupulous CMCs, when they can easily reclaim the money by themselves for free."

If you think that you might have a valid claim for being mis-sold PPI then you can make a claim by following this simple guide. You will be in control of your claim and if you are due any compensation you can keep it all, rather than having a significant fee deducted by a CMC.

How to make a PPI claim

First of all you need to check that your claim is valid. Try and establish how you were sold the product. Were you pushed into it? Did you understand what it was you were being sold? Would the PPI have been valid had you had to claim on it?

The general rule is, if you think you were mis-sold, then give it a go. Firstly, check your policy to find out the details of the product and to check how you were sold it.

Paperwork

One of the common misconceptions is that you will be unable to make a successful claim if you don’t have all the paperwork. In most cases this is not the case.

Though it certainly helps to have all of the paperwork, if you do not have a copy of your agreement or terms and conditions you just need to contact the provider and ask for a copy of the information as it was at the time you were sold the product.

Lenders may ask for a £1 fee to cover sending these, so remember to include a cheque to save time.

Were you mis-sold PPI?

The next step is to check that you understood what you were being sold at the time. PPI sellers have a duty to ensure that you understand what the product is, how it relates to your circumstances and whether you can benefit from it before you are sold it.

All PPI policies have exclusions or conditions which mean you may not be able to claim under certain circumstances but you should have had all of this explained to you, including how the specific terms relate to your own individual circumstances when you were sold the policy.

The vital information to be clear on is what were you told when you were sold the product and the key questions to ask yourself to clarify if you are likely to have a valid claim are:-

- Were you told you had to buy a PPI policy from the same firm that sold you the loan or credit card? If so, you have probably been mis-sold PPI.
- Were you told that the product was compulsory?
- Was the salesperson pushy when trying to sell you the product?
- Was it made clear to you that the product was optional?
- Were you told that in order to qualify for the product you had to sign up to an insurance product too?
- Were you told that there is a cooling-off period when you can change your mind?
- Did a sales person suggest that it would be more expensive for you if you didn’t take out PPI?
- Was it implied that you needed to purchase PPI in order to qualify for the product?
- If you had an agreement taken out before mid-2007 you may have had to uncheck a tick box to opt out of PPI. If this is the case you were mis-sold the product.
- Were you unemployed or retired when you took put the product? If so, the unemployment cover is worthless and this should have been pointed out to you at the time.

Once you have made all of these checks and you feel you have a good case you should write to the company that sold you the product and ask for a refund.

Don’t be put off if you are rejected by the company. You can appeal to the Financial Ombudsman Service (FOS). This service is completely free and the FOS exists to settle complaints between consumers and financial services companies.

Perseverance and patience means you can claim back all of the money yourself and not have to give up anything to a claims management company.