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

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?

Name withheld

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.

moneyagonyaunt.com

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

PROMOTED VIDEO
Life and Style
life
Arts and Entertainment
Cold case: Aaron McCusker and Christopher Eccleston in ‘Fortitude’
tvReview: Sky Atlantic's ambitious new series Fortitude has begun with a feature-length special
Voices
Three people wearing masks depicting Ed Miliband, David Cameron and Nick Clegg
voicesPolitics is in the gutter – but there is an alternative, says Nigel Farage
Voices
The veterans Mark Hayward, Hugh Thompson and Sean Staines (back) with Grayson Perry (front left) and Evgeny Lebedev
charity appealMaverick artist Grayson Perry backs our campaign
News
i100
News
people
Sport
Chelsea manager Jose Mourinho
footballThe more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
Life and Style
Vote green: Benoit Berenger at The Duke of Cambridge in London's Islington
food + drinkBanishes thoughts of soggy school dinners and turn over a new leaf
News
Joel Grey (left) poses next to a poster featuring his character in the film
peopleActor Joel Grey comes out at 82
News
i100
News
business
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Compliance Assistant

    £13000 per annum: Recruitment Genius: This Pension Specialist was established ...

    Ashdown Group: Market Research Executive

    £23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

    Recruitment Genius: Technical Report Writer

    £25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...

    MBDA UK Ltd: Indirect Procurement Category Manager

    Competitive salary & benefits!: MBDA UK Ltd: MBDA UK LTD Indirect Procurement...

    Day In a Page

    Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

    Isis hostage crisis

    The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
    Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

    The runaway buccaneers and the ship full of gold

    Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
    Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

    Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

    Maverick artist Grayson Perry backs our campaign
    Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

    Assisted Dying Bill: 'I want control of my life'

    This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
    Move over, kale - cabbage is the new rising star

    Cabbage is king again

    Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
    11 best winter skin treats

    Give your moisturiser a helping hand: 11 best winter skin treats

    Get an extra boost of nourishment from one of these hard-working products
    Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

    Paul Scholes column

    The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
    Frank Warren column: No cigar, but pots of money: here come the Cubans

    Frank Warren's Ringside

    No cigar, but pots of money: here come the Cubans
    Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

    Isis stands strong as its numerous enemies fail to find a common plan to defeat it

    The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
    Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

    Virtual reality: Seeing is believing

    Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
    Homeless Veterans appeal: MP says Coalition ‘not doing enough’

    Homeless Veterans appeal

    MP says Coalition ‘not doing enough’ to help
    Larry David, Steve Coogan and other comedians share stories of depression in new documentary

    Comedians share stories of depression

    The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
    Has The Archers lost the plot with it's spicy storylines?

    Has The Archers lost the plot?

    A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
    English Heritage adds 14 post-war office buildings to its protected lists

    14 office buildings added to protected lists

    Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
    Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

    Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

    Scientists unearthed the cranial fragments from Manot Cave in West Galilee