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Hall & Hanley

The PPI basics: what is it, how was it mis-sold?

PPI stands for ‘Payment Protection Insurance’

It’s designed to cover your loan or credit card repayments for a year in the event of an accident, sickness or unemployment, or sometimes just accident and sickness.

Yet it’s been widely mis-sold, and you could even have it without knowing. If you were mis-sold PPI, you may be able to reclaim £1,000s. See our H&H mis-selling checklist.

No. Payment Protection Insurance itself isn’t a bad product. But it’s been widely mis-sold with thousands of loans, leaving many paying hundreds for potentially worthless cover.

Is every PPI policy bad?

The insurance cost often dwarfs the interest, so many believe it’s the most overpriced financial product around. Sales staff were hugely incentivised to sell PPI whenever possible. Many were under so much pressure, they strayed far from the truth.

If you’ve got PPI, ask if you really need it. If you’ve a bank loan with PPI, you should be allowed to cancel the insurance. If you need PPI, getting a standalone policy and cancelling the existing one should save cash, as less will go towards big commissions. You can get similar cover at about a third of the cost.

What products could I have had PPI on?

Payment protection insurance was most commonly sold on loans and credit cards.

However, if you had a mortgage, secured loan, car finance plan from a dealership, store cards, catalogue credit, monthly-paid insurance or even an overdraft (though we’ve only heard of Barclays doing this) then check to see if you had PPI.

Why has it been mis-sold so much?

Sales staff dressed as advisers were hugely incentivised to sell PPI whenever possible. Many were under so much pressure they strayed far from the truth, and much of the insurance cost went on huge commissions. The sellers were often trusted financial institutions, so sadly, many were left with mis-sold PPI.

When did PPI mis-selling start?

There’s no specific start date – the problems of mis-selling have been around for a long time. The press was warning about them back in 2000, Claims can generally start on policies from the 1990s (possibly earlier). The financial regulator started fining PPI companies in 2006, but a big improvement wasn’t seen until 2011.

How much will I get back?

Potentially, big money. Generally, the amount you pay for loan PPI is about 15% of your balance, but it could be up to 30%. It doesn’t sound much, but it quickly mounts up.

For loan reclaims it could be many thousands of pounds. Yet calculating the actual amount’s difficult and often unnecessary, as the lender will do this for you.

It’s possible to estimate how much the insurance has cost to see what you can reclaim. It then depends whether you’re entitled to the full amount, or just part of it.

One way of doing this is to work out what your monthly loan payment should have been. Here are some examples – if you were paying more, it’s likely PPI was included.

  • A £5,000 loan for 5 years at 5% should be £95 a month.
  • A £10,000 loan for 10 years at 10% should be £130 a month.
  • A £20,000 loan for 3 years at 20% should be £740 a month.

Once you’ve worked out the amount, you can add the actual cost of any interest (so you’re in the same position you would’ve been without the insurance), plus the 8% interest a court would give to compensate.

The provider should also correct any further losses you’ve had as a result, such as any arrears charges due to taking the loan. But if you’ve an outstanding debt to the lender, they can use the money to pay it off.

In some circumstances your offer may be lowered due to a technical process called ‘comparative redress’. It’s not compulsory for you to accept this decision and we’ve discovered banks have been underpaying, often wiping a third off refunds. See the Hall & Hanley Comparative Redress section for more info on how to challenge if this happens to you. We can challenge this for you

If you’re in any doubt contact us and we would be happy to help and check We are able to rightly reclaim what is yours.

I wasn’t stupid enough to get PPI, what do I get back?

There are fundamental problems with the question. Being mis-sold PPI doesn’t make you stupid. It often involved lies and deceit from supposedly trusted institutions.

Those who reclaim are only getting back cash that was wrongly taken from them

 

I don’t have full details, what can I do?

I’ve forgotten who my loans / cards were with, how can I find out?

Check your credit report. It lists any debts that were alive within the last six years, even if they’re now closed. At Hall & Hanley we can carry out a proper check and do this for FREE .

I don’t have my PPI account number or terms, how do I check if I had PPI?

Don’t’ worry, we will be able to tell you whether you’ve had PPI, either now or at some point in the past.

Click here for a FREE check.

My PPI was on an old account, how far back can I reclaim?

You can complain about a product sold at any time though here are some guidelines which may help. It’s easier if your insurance was active in the last six years but don’t let this put you off.

Insurance started in the last six years: There’s no issue here at all. Even if the loan’s now paid off, you can start a reclaim.

Older insurance that’s still active, or ended within the last six years: You can start a reclaim. The six year rule applies to active insurance, so a policy taken out 12 years ago but paid off five years ago was still active within the key six year period.

If your policy ended over six years ago: The ‘statute of limitations’ means banks don’t need to keep records that are over six years old. However, there is no official cut-off time .

Will I have to close my account / lose my overdraft / be penalised if I reclaim?

No – this shouldn’t happen. The Financial Ombudsman Service ruled against closing accounts during the bank charges campaign, so it’s no longer allowed.

Will reclaiming PPI hit my credit rating?

No, it won’t hit your Credit Rating and won’t go on your credit file.

Can I make more than one PPI complaint?

Yes. You can reclaim for each policy you were sold, whether they’re with the same or different banks. Just complete a separate form for each complaint.

I’ve already reclaimed bank charges, can I still reclaim PPI?

Yes. You can reclaim PPI whether or not you’ve already reclaimed bank charges.

Can I reclaim if I’m still paying off the loan?

Yes – though be aware any refunds may come off your balance (but it means you’ll owe less if that happens).

Can I reclaim if the loan’s repaid and I’m no longer a customer?

Yes. What counts is the fact you were mis-sold when you got the policy, not whether you still have the loan. The fact the debt’s cleared doesn’t mean you weren’t mis-sold, so you can still reclaim.

I’ve had a debt management plan / IVA / been bankrupt, can I reclaim?

If you receive the money directly to yourself.  We will invoice you.  If the money is offset we will invoice the IP or official reciever.

My lender’s been taken over. Can I still reclaim?

Yes. In buying another company, the new owners are usually liable for its debts and for paying customers. Sometimes the liability stays with the old provider, but complain to the new firm and it’ll let you know if that’s the case.

As an example, Egg’s credit cards have now been taken over by Barclaycard, so Barclaycard’s liable for Egg’s past PPI mis-selling.

Can I reclaim PPI if the policyholder has died (eg, parent / husband / wife)?

Yes. Any monies owed become part of their estate, so the person who inherits is entitled to reclaim (let the executor know too). If there’s no will this follows the rules of intestacy, see gov.uk. Yet it’s worth noting there may be problems proving what happened at the time of the sale if only the policyholder was present

I had a joint loan with my partner but we’re now divorced, does this affect my case?

This depends on the lender. Some need two signatures to release the info. Some only pay part to the person complaining, and keep the rest for the partner. Others pay it all to one person – if the other ever reclaims, they’ll tell them to find their ex.

Can I still reclaim if I live abroad?

Yes. If you were mis-sold PPI, you can reclaim.

My lender was based in Jersey. Can I reclaim?

You can reclaim from a company based anywhere in the world if it mis-sold you PPI. Yet the company needs to be UK regulated to get help from the Financial Ombudsman Service. Not all Jersey-based companies are UK regulated. Don’t worry we can check this for you.

I had PPI on a catalogue, overdraft, store card, car loan or credit card?

Yes. If you were mis-sold payment protection on them, you can reclaim. However, some non-bank policies from before 2005 weren’t regulated at the time, making it trickier. At Hall & Hanley we can do a FREE check.

I was told to buy mortgage PPI, was it mis-sold?

Yes, but mortgage PPI wasn’t as commonly mis-sold, so it’s less of an issue. Remember, good PPI protects your mortgage repayments in the event of accident, sickness or unemployment –

Mortgage lenders can legitimately say that having PPI is a condition of allowing you a mortgage – but they aren’t allowed to say it must be theirs. How about a FREE check?

I wanted PPI when I signed up, was I mis-sold?

The company you got it from had a duty to ensure the policy was appropriate for you. For example, if you were paying for unemployment cover but were self-employed when you got the PPI, it’s likely it was inappropriate, meaning you may have been mis-sold. Hall & Hanley can do a FREE check.

What counts as mis-selling – how do I know?

The company who sold you the insurance (this is often the bank or lender) has a duty to ensure the PPI was appropriate for you. Many also lied by saying it was compulsory, or sometimes even added it without asking you.

How does the bank decide if my complaint’s eligible?

It should look at whether the info you were given when you signed up meets the regulator’s guidelines. These state the bank shouldn’t have pressured you to buy, should have checked you were eligible, told you all the exclusions and price, and ensured the sale was fair. At Hall & Hanley we take care of the entire paper work and communication with the banks. Start a reclaim Now

Aren’t the banks supposed to contact people who were mis-sold?

This only applies to some people – those identified as being ‘systemically mis-sold’ (ie, mis-sold as part of the sales process). Yet there are many other types of mis-selling.

Don’t use this as a reason to wait It is not in the banks interest to write and tell you they screwed up and charged you £1000s of needless pounds – get your complaint started now. At Hall & Hanley we can do a FREE check and take care of all the paper work, we operate a No Win No Fee*.

 

Hall and Hanley Ltd, registered in England & Wales. Registered Office: Imex house, 40 Princess Street, Manchester, M1 6DE
Company Registration Number: 07851228
VAT Registration Number: 128052925 | Data Protection Licence Number: Z3001000
Regulated by the claims management regulator in respect of regulated claims management activities, regulation number CRM29198
Registration is recorded at www.gov.uk/moj/cmr
 
* Any compensation awarded to the customer in regards to a claim that is subject to IVA, Debt management or bankruptcy are still chargeable.
Where possible Hall and Hanley will pursue the insolvency practitioner or official receiver for any outstanding fees owed by the client.
If we are unsuccessful in obtaining our fee from them the client is still liable for monies owed.
A fee may be applicable if you cancel outside the cooling off period.