Your rights in regard to payment protection insurance ("PPI") -
I have been missold
Can I get my money back?
The clearest cases of mis-selling are those where customers were sold the insurance when they had no chance of claiming on it. Examples are as follows:
- If you were not employed at the time you took the insurance - whether you were unemployed, self-employed or retired - it would be impossible for you to make a valid insurance claim
- If, when you took the insurance, you had a medical problem which could have prevented you from working, you should have been warned that the insurance was unlikely to be suitable for you. If it wasn't explained, you can claim
- If you were sold a 'single premium' policy - where the whole cost of the loan is paid for upfront with money that is also borrowed at the same interest rate as the loan - you should at least be able to get a refund by cancelling the PPI. If you cancelled or repaid the loan early, but were unable to cancel the PPI, then you can claim for a refund
- If the refund offered was only a fraction of the cost you paid, you can claim to get a fair refund. If you were able to cancel the insurance, but the loan was redrawn at less favourable rates, you can also claim money back
- If the entire cost of the PPI was not explained to you, or if the company only quoted the cost of the loan with the PPI attached, then you can claim
- If you were told the insurance was compulsory it is likely you can claim. Lenders can insist that a borrower has PPI, but any company that signs up to the banking code must not insist you take out the insurance with them. It is far cheaper to buy it separately from an independent provider. Try This is Money's independent comparison tool
- If other important features of the loan were not explained - for example, the terms for cancelling the cover or significant exclusions such as stress and back problems - then you can claim
- Most policies have an upper age limit - usually 65 or 70. If you were older than the age limit for your policy when you took the insurance, you can claim
- If you were sold your PPI by one of the firms that has already had FSA action taken against it, there is a good chance you can claim. There is information on those firms here on the FSA website
- If you already had alternative cover that could insure your repayments - such as income protection or an employer illness or redundancy package - but were not asked about this, you could claim
- If you bought PPI to cover a long term loan there is a chance that the insurance will run out before the loan is repaid. Most PPI policies will only run for five years, so if your loan term is longer than this the seller should have explained this limitation. If they didn't, you can claim
- If you have noticed you are paying for PPI that you didn't know you had there is a chance that it was added without your knowledge, or through an 'opt out' box that you missed. It will be up to the seller to prove you agreed to the insurance, so if you can't remember being asked, you can claim.
HOW MUCH WILL YOU GET?
If the firm, or the Financial Ombudsman Service, agree that you were mis-sold the insurance, you should get back all the premiums you have paid, with interest added.
It may be that you weren't mis-sold the policy in the first instance, but were treated unfairly when you went to cancel the cover. FSA rules say that when a customer cancels a single premium policy, the firm should give a 'fair' refund. This may not necessarily be a pro-rata refund i.e. you won't get half the cost back if you cancel halfway through. However, firms should only charge for 'reasonably incurred costs'. If you don't feel the refund is fair, challenge it.
WHO DO I COMPLAIN TO?
To make your claim you first need to complain to the firm that sold you the insurance. It may be that this firm was acting as the representative of another company. In which case you should write to them.
You should include all the reasons why you believe you have been mis-sold the insurance.
NOTE: There are many claims management companies who claim that they can recover money for you for missold PPI. In the most cases this is true. However, the reality is that it is so simple to reclaim PPI premiums that you have paid that you might as well do it yourself and therefore keep ALL of the money you recover.