Consumer Rights: Don't leave it too late to claim for mis-sold PPI
The banks are seeking a cut-off date for mis-sold payment protection insurance compensation — but there's no need to use a third party
Sunday 27 January 2013
Costing £12bn, with half a million complaints in the bag, PPI (payment protection insurance) is breaking all mis-selling records and the banks want a line drawn under the scandal. PPI has acquired a bad reputation, but it is how it was sold that is the problem.
PPI is designed to help policyholders repay loans and credit cards if they get ill, have an accident, are made redundant or die. With the right policies, your mortgage and card bills will be paid and you won't lose essentials while you recover.
But these policies were sold, by banks and other providers, to millions who didn't need them or could never claim – people with other cover, self-employed or exempt (because of a pre-existing medical condition, for example). Many were refused a loan unless they also paid for a useless PPI policy. Sales staff on commission didn't explain the policies properly, customers were misled and banks pocketed the profit.
Millions of people have been compensated. The average payout is just under £3,000, covering a refund of the premiums, interest on those premiums if they were added to the loan, and the interest that would have been earned had that money been saved.
Everyone seems to have been taken by surprise by the scale of the scandal. The banks have had to take on thousands of staff and set up call centres to deal with claims, and the debacle could cost them £40bn in total. Now they want it to stop. They've asked the watchdog, the Financial Services Authority, to set a deadline in April 2014, after which no more claims will be accepted. However the FSA and the British Bankers' Association haven't agreed on any cut-off date.
Consumer groups are livid. Customers were sold these policies over a decade, and if they were mis-sold, every last claim should be settled.
It's a mess, and of course there are people making money out of clearing it up. Claims management companies deal with the claim and take a slice (up to a third) of the compensation. But they're also pushing up the bill by making false or invalid claims which are costly for lenders to investigate.
All this adds up to higher charges for bank customers down the line: the more compensation banks pay, the more likely they will be to bring in charges to recoup. An end to free accounts is a case of when, not if.
You should have had a letter telling you if you've been mis-sold. However, there have been delays so:
1. Check your paperwork. You may have a PPI policy without realising but don't make a false claim.
2. If you took out the policy when you were self-employed, had a pre-existing illness or other cover, you've paid out money you didn't need to.
3. Write direct to the lender, now, in case a cut-off date is agreed.
4. If refused you can appeal to the Financial Ombudsman Scheme. You may have to wait up to a year.
5. If the mis-selling firm has gone out of business you may be able to claim through the Financial Services Compensation Scheme.
6. Don't get excited by messages from claims management firms saying you're entitled to compensation. They have your contact details but not financial records.
7. If you have no paperwork, ask the lender for loan details.
Q: As a widow, I recently signed up to a dating site and was having a lovely conversation with a Spanish man. He, out of the blue, told me he'd been left a lot of money and wanted to use my bank account to get it into the UK. I asked all sorts of questions and decided to go along with it as we seemed to be getting closer.
He said his solicitor would need my account details. I got cold feet and he accused me of ruining our relationship. I said I trusted him and he suggested there was another way – if I sent £3,000 to his bank. I knew then it was a con, ended our "friendship" and alerted the dating site. It barred him.
I got sucked in because he wasn't from Holland or Nigeria, where I'd read about scams operating. What should I do?
A: I am sorry you were hurt but glad you didn't lose money. On social media and dating sites, if crooks know you're looking for love they assume you're more vulnerable. But, the same rules apply as to letters and emails: don't send money or account details to someone you don't know and trust. Thanks for telling the site. You should also report this to your trading standards department or actionfraud.police.uk and contact your bank if you divulged account details.
Independent Partners: See how much you could save by switching credit cards. Compare now
filmFilm producers sue Warner Bros for $75m over Hobbit films
sportNapoli 2 Arsenal 0: Gunners must now face either Real Madrid, PSG, Bayern Munich, Atletico Madrid or Barcelona in knock-out stages
Swedish stars ask fans for £195 pledges on crowd-funding website
voicesJust when you thought you could find a man, get married, and have a baby by the age of 35... it turns out you’re too late, says Grace Dent
musicAs Mariah Carey and Noddy Holder rake in the royalties from their classics, why there hasn't been a decent festive hit for 20 years?
theatreAuthor Daniel Rosenthal recalls the mishaps that almost brought the curtain down on the likes of John Gielgud and Diana Rigg
lifeAs the Royal Mail plans to phase out deliveries on two wheels, it's no wonder posties are in a spin
musicThe 21-year-old beat Ella Eyre and Chlöe Howl to win the honour
lifeFull of the joys and want to help your fellow man? December isn't the time to do it
techLuke Blackall reports on precision engineered prams and babygros that monitor your child 24-7
- 1 Nelson Mandela memorial: ‘Bogus’ interpreter made mockery of Barack Obama’s tribute in Soweto
- 2 French café starts charging extra to rude customers
- 3 Sun will 'flip upside down' within weeks, says Nasa
- 4 Is Facebook making us forget? Study shows that taking pictures ruin memories
- 5 Australia incest case: Filthy and severely deformed children found in remote farming community after generations of inbreeding
iJobs Money & Business
£77099.84 - £96375.26 per annum + Bonus + Benefits : Harrington Starr: My clie...
£45000 - £60000 per annum + Bonus and Package: Harrington Starr: Trading appli...
£50000 - £60000 per annum + BONUS + BENEFITS: Harrington Starr: A leading prov...
£70000 - £90000 per annum + BONUS + BENEFITS: Harrington Starr: A leading mark...
Day In a Page
A Grade II-listed home with six bedrooms, secluded landscaped gardens and views across Hadley Green
A Grade II-listed mansion with two apartments and a cottage, near Gretna Green
A three-bedroom Grade II-listed mews house with vaulted ceilings and roof garden
A spacious Grade II-listed family home with annexe and equestrian facilities among four acres of land in Itchingfield
A four-bedroom home with exposed brick walls and open fires in the picturesque village of Northill
A Grade II-listed property with five bedrooms and unique tower, overlooking Hastings Old Town
A charming five-bedroom detached family home, set within half an acre in Kew
A two-bedroom maisonette set on the top two floors of a period building, close to Kentish Town Tube.
Take advantage of the extra space provided by former stables and outbuildings at this five-bedroom farmhouse.
This three-bedroom Victorian terrace is near to Queen’s Road Peckham station, Nunhead station.
A five-bedroom modern house with terrace, swimming pool, Zen treehouse and large carp pond
An unexpected gem with four bedrooms, remarkable vaulted reception and a galleried study area
A five-bedroom house in one of Lymington's most sought after tree lined avenues, moments from the marinas and sailing clubs
A grand early 19th century B&B close to the historic harbour, with four en suite bedrooms
A four-bedroom, 17th century home with walled gardens, a landscaped terrace, cellar and open fires
A six-bedroom house with five bathrooms and four reception rooms spread over 4,000sq ft of luxury living space
A stunning three double-bedroom apartment with two decked terraces in the exclusive gated community, Bromyard House
A 10-bedroom period, family home amid beautiful surroundings in the centre of the Wentworth Estate in Longcross village
A stylish three-bedroom apartment with two bathrooms and private landscaped garden, moments from Fitzroy Square
A Grade II-listed Elizabethan barn with landscaped gardens, exposed elm beams and four bedrooms, all with lovely views
A six-bedroom family home, dating back to 1280 with four reception rooms, barn, swimming pool and tennis courts in Harwell
A spacious two-bedroom flat, refurbished to a very high standard with private landscaped garden, close to Kentish Town station
An exceptional two-bedroom apartment with balcony and underground parking in the centre of Richmond
A one-bedroom, luxury, duplex apartment in the grand landmark building, Imperial Hall
Run a fabulous boutique shop, live above it in a one-bedroom flat and let a second one-bedroom flat that comes part and parcel
A Grade-II listed, thatched cottage in Hundleby village, with five bedrooms, a coach house and three and a half acres
A spacious two-bedroom flat in the heart of Hoxton Square with wooden floors and roof terrace
A five-bedroom family home with stunning pool and gym complex set among two acres of land
A six-bedroom period house with heated swimming pool and a separate two-bedroom annexe cottage in Townlake, £795,000
A spacious and contemporary two-bedroom flat arranged over three floors, with garden patio close to St George Square, £600,000
A one-bedroom flat in a beautiful Regency building opposite the beach in Kemp Town, £190,000
A two-bedroom flat with London skyline views close to Surrey Quays. £395,000.
A seven-storey tower with three bedrooms and a stunning roof terrace. Guide price: £850,000.
A 16-bedroom country pile with nine reception rooms, four self-contained flats and a 13th century Peel Tower. £850,000.
A classic six-bedroom Victorian Manse house 10 miles from Edinburgh. £495,000.
John Lennon's childhood home in Liverpool to be sold at auction. Guide price: £150,000-£250,000.
A six-bedroom detached period property with secluded gardens, ample parking and a double garage in Rye, £675,000.
A large split-level property with three double-bedrooms and roof terrace, close to Crouch End Broadway, £625,000.
A charming barn conversion in the picturesque Cotswold village of Ilmington with three bedrooms, a detached garage, workshop and beautifully manicured gardens £675,000.
A three-bedroom new build, ground-floor flat with two bathrooms, close to Bermondsey tube, £445,000.