Martin Lewis, founder of MoneySavingExpert, on making sure you stay safe when it comes to PPI.
The guillotine on reclaiming PPI is being oiled, ready to slice down and stop payouts soon. To assume 'I'm not due owt' could be expensive.
Already £34bn has been repaid and £8bn has been put aside to pay the remainder of the claims.
Of course PPI reclaiming isn't new (I've got the grey hairs to prove it). I wrote my first guide warning about the dangers of PPI back in 2001, when I was the fresh-faced newbie Money Saving Expert.
I wrote my first reclaiming guide with free template letters in around 2006. Finally, by 2008 the regulator got involved, and the saga has been going on ever since, until in August 2017, it agreed to the banks' demands to impose a deadline – so we're in the final countdown.
Which is why everyone who has had a loan, a credit card, store card, mortgage, overdraft, catalogue debt in the last 30 years should be checking ASAP whether they had PPI and if so, were they mis-sold it.
So let me run you through what you need to know…
1. Payment Protection Insurance (PPI) was systemically mis-sold
Banks and building societies for decades scripted staff to hard sell these policies which were added on to debts. What's staggering is even with all this money repaid, no one has been prosecuted for it.
2. The common types of mis-selling include people being
- lied to that they had to have it (it was never compulsory)
- added it without their permission
- lied to that it'd get them a better deal
- given it when it was inappropriate such as 'unemployment cover' for those who were self-employed, or not being asked about pre-existing conditions that could invalidate it.
3. PPI in itself isn't a bad concept.
It was said to cover your repayments if you lost your job or got sick, but actually at most it paid out for a year, and bank sold policies were outrageously over-priced, with the maximum payout often less than the policy cost.
4. You do not need to pay someone to reclaim, do it yourself for free
If you think you may be owed money – or haven't a clue - don't delay, check now.
The huge money and advertising pumped out by claims firms makes many people think that's the only way to reclaim. It isn't.
5. The deadline is about starting a claim
The last time you can submit a claim to a lender that you were mis-sold is 29 August this year – as long as you do that, if it rejects you, you can still follow through to the Financial Ombudsman afterwards.
Technically, after that you could go to court but it is much more difficult. Six months sounds a long time, but it'll go quick, so get started now.
6. The Plevin rule means millions more may be due
The Plevin rule is based on a 2014 court case (by Susan Plevin). It only became a mainstream rule in August 2017, at the same time as the regulator announced the deadline, yet frustratingly the deadline still applies to it too.
It's all about the commission the banks were bunged by the insurance companies for flogging their PPI. If that commission was over 50% and you weren't told it (and I've never met anyone who was), then you are due the difference back between the level of commission and 50%.
And staggeringly the AVERAGE commission banks were paid for loan PPI was 67%. This means millions of people who've had PPI, even if it were sold right in every other way, are due something back – though it only applies to policies active in or after 2008.
If you think this applies then you can open or (usually but not always) reopen a case with the lenders about Plevin. If you think you were mis-sold in another way as well and haven't tried before then do a normal mis-selling case and even if they reject you for that they have to consider Plevin as well (all the key links above with help you with a Plevin case).
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