I wrote a post recently about the fact that the hubby and I are due a PPI refund because we were mis-sold PPI. In terms of milestones in our debt payoff journey, receiving this news was pretty epic for us!
Obviously being mis-sold PPI isn’t great, in fact it’s pretty annoying that our creditors tricked us into taking PPI in the first place. However, we’re really pleased about getting the refund that is due to us as it’s going to help us make a real impact in terms of reducing our debt.
Since publishing that post, I’ve received a few comments and questions about PPI so I thought I’d write a couple of posts with more detail as to what mis-sold PPI is all about. This post (part 1) will explain what PPI is and the criteria for possibly being mis-sold a PPI policy.
In part 2 next week, I’ll be posting more about how you can claim back PPI yourself and how a PPI refund is calculated if you are due one.
What is PPI and what’s all the fuss about it being mis-sold?
Payment Protection Insurance (PPI) is an insurance product sold by UK banks or credit providers. It’s an add on product designed to insure you so that you can still make loan repayments for up to 1 year should you lose your income for some reason through illness, accident or job loss. PPI products can be added onto loans, mortgages, credit cards, car finance, store cards and overdrafts.
PPI can be a useful insurance product and many people willingly take out PPI. However over the last decade, it’s become apparent that PPI has been widely mis-sold for various reasons with several UK banks having to pay fines for their part in the PPI scandal. You can find out more about how the PPI scandal unfolded here.
Have you ever taken out PPI?
You might already be aware of taking out PPI on a financial product but that doesn’t mean that it wasn’t mis-sold to you. There are many ways in which PPI has been mis-sold which I’ll come onto in the next section!
Alternatively, you might think that you’ve never taken out PPI before, but it’s definitely worth checking with your creditors because there are cases where the customer hasn’t been aware of PPI being added on (like us!).
You should definitely investigate any PPI policies that were active or ended within the last six years and it’s also well worth looking back at even older policies, although the chances of a successful claim are slightly lower if it turns out you think you were mis-sold PPI.
How might you have been mis-sold PPI?
It a nutshell, it depends on what exactly was explained to you at the time of being sold the loan product and the PPI.
You might have been mis-sold PPI because key facts or exclusions weren’t pointed out at the time of the insurance being taken out. An example here could be that you weren’t told what medical conditions were exempt from the policy or whether the PPI would cover you if you were self-employed or retired rather than employed.
If you were told that taking out PPI was compulsory and needed in order to be accepted for the loan product, then you might have a well have a case because PPI has always been an optional add on product.
Some banks or credit providers used pre-ticked selection boxes on their online application forms which could mean that you had to opt out of taking PPI rather than opting in, which is unfair and misleading. This could mean that you weren’t even aware that you had PPI in the first place.
You can read more information about how you could have been mis-sold PPI on this handy PPI mis-selling checklist.
What should you do if you think you’ve been mis-sold PPI?
If you have good reason to think you might have been mis-sold PPI, the next step is to put in a claim to your creditors explaining the reasons as to why you think you have been mis-sold the PPI policy. (You should only do this if you really think you have been mis-sold PPI and not just because you could do with the money.) 🙂
There are lots of PPI claim companies on the internet willing to do all the investigating for you which can be handy if you’re short on time and if you don’t have your details to hand. You may already receive those lovely automated phone calls or text messages from some of them!
The benefits to using a PPI claim company is that you can sit back, relax and let them do all the donkey work for you. You might end up with a tidy payment in your bank account before long if your claim is successful.
Be aware though that by letting a PPI claim company investigate and put forward a claim on your behalf, they will take a cut of any refund due to you – sometimes as much as 25% plus VAT. Here are 10 things you should know before using PPI claim companies.
The alternative is to reclaim PPI yourself which is free to do and means that if your claim is successful, you’ll get the full refund amount paid to you. It takes a little time and effort but it’s pretty straightforward.
If you think you were mis-sold PPI and are interested in claiming back PPI yourself, stick around for part 2 next week!
Thanks for reading A Disease Called Debt! If you enjoyed this post and don’t want to miss out on the next instalment about PPI next week why not subscribe by email?
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Hi Hayley some top tips there. The chances are a large number of people will have been mis-sold PPI so could be a nice payday around the corner, especially if you claim yourself. Will look forward to part two.
Rob recently posted…Starting your own Debt Blog
Thanks Rob! Claiming PPI yourself can seem daunting but it’s really straightforward so hopefully someone will benefit from the information next week!
Here in the US we have the same thing, it is called something different but it is essentially the same product. One of my first credit cards had the pre-selected boxes and I was unaware of the need to opt-out. I was charged for this service for a few months before I noticed the weird charge on my bill. I called them and got it cancelled and even got refunded fees from all the months is was on there. Luckily, I caught it early and I hadn’t been charged much at the point, which probably made it easier for the company to accept having to pay that money back. They didn’t put up a fight, thank goodness!
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Phew! Glad you managed to get this charge refunded! Good job you noticed it. It’s so bad that these credit companies feel that they can trick us with these pre-selected boxes! Luckily I think it’s more common now (since the PPI scandal) to have to opt in rather than opt out over here.
Hayley, I’m hoping some UK readers will see this and maybe find out that they, too, are owed a refund. I’m so over the moon for you guys! Way to go.
Done by Forty recently posted…Rashard Mendenhall is My Hero
Thanks DB40! I hope this info will help some people get back money that is rightfully theirs too! 🙂
The problem about using a debt reclaim company to help you isn’t just that they take some of your refund – it’s that if you haven’t paid that debt off, the lender will often decide to “set off” your PPI compensation against the debt you owe. So you never get a cheque. But the reclaim firm still wants its fees.
I have seen a client at CAB taken to court for a CCJ by his PPI reclaim company in this situation – he had never had a CCJ before!
Don’t do it! Anyone who can read this article will be able to handle the reclaim themselves.
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