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

News
election 2015The 10 best quotes of the campaign
News
A caravan being used as a polling station in Ford near Salisbury, during the 2010 election
election 2015The Independent's guide to get you through polling day
News
people
Voices
David Blunkett joins the Labour candidate for Redcar Anna Turley on a campaigning visit last month
voicesWhat I learnt from my years in government, by the former Home Secretary David Blunkett
Finacial products from our partners
Property search
  • Get to the point
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

    Ashdown Group: Editor-in-chief - Financial Services - City, London

    £60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

    Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

    £25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

    Guru Careers: Management Accountant

    £27 - 35k + Bonus + Benefits: Guru Careers: A Management Accountant is needed ...

    Guru Careers: Project Manager / Business Analyst

    £40-50k + Benefits.: Guru Careers: A Project Manager / Business Analyst is nee...

    Day In a Page

    General Election 2015: ‘We will not sit down with Nicola Sturgeon’, says Ed Balls

    'We will not sit down with Nicola Sturgeon'

    In an exclusive interview, Ed Balls says he won't negotiate his first Budget with SNP MPs - even if Labour need their votes to secure its passage
    VE Day 70th anniversary: How ordinary Britons celebrated the end of war in Europe

    How ordinary Britons celebrated VE Day

    Our perception of VE Day usually involves crowds of giddy Britons casting off the shackles of war with gay abandon. The truth was more nuanced
    They came in with William Caxton's printing press, but typefaces still matter in the digital age

    Typefaces still matter in the digital age

    A new typeface once took years to create, now thousands are available at the click of a drop-down menu. So why do most of us still rely on the old classics, asks Meg Carter?
    Discovery of 'missing link' between the two main life-forms on Earth could explain evolution of animals, say scientists

    'Missing link' between Earth's two life-forms found

    New microbial species tells us something about our dark past, say scientists
    The Pan Am Experience is a 'flight' back to the 1970s that never takes off - at least, not literally

    Pan Am Experience: A 'flight' back to the 70s

    Tim Walker checks in and checks out a four-hour journey with a difference
    Humans aren't alone in indulging in politics - it's everywhere in the animal world

    Humans aren't alone in indulging in politics

    Voting, mutual back-scratching, coups and charismatic leaders - it's everywhere in the animal world
    Crisp sales are in decline - but this tasty trivia might tempt back the turncoats

    Crisp sales are in decline

    As a nation we're filling up on popcorn and pitta chips and forsaking their potato-based predecessors
    Ronald McDonald the muse? Why Banksy, Ron English and Keith Coventry are lovin' Maccy D's

    Ronald McDonald the muse

    A new wave of artists is taking inspiration from the fast food chain
    13 best picnic blankets

    13 best picnic blankets

    Dine al fresco without the grass stains and damp bottoms with something from our pick of picnic rugs
    Barcelona 3 Bayern Munich 0 player ratings: Lionel Messi scores twice - but does he score highest in our ratings?

    Barcelona vs Bayern Munich player ratings

    Lionel Messi scores twice - but does he score highest in our ratings?
    Martin Guptill: Explosive New Zealand batsman who sets the range for Kiwis' big guns

    Explosive batsman who sets the range for Kiwis' big guns

    Martin Guptill has smashed early runs for Derbyshire and tells Richard Edwards to expect more from the 'freakish' Brendon McCullum and his buoyant team during their tour of England
    General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

    Miliband's unlikely journey from hapless geek to heart-throb

    He was meant to be Labour's biggest handicap - but has become almost an asset
    General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

    On the margins

    From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
    Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

    'This is the battle of young Egypt for the future of our country'

    Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
    Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

    Why patients must rely less on doctors

    Improving our own health is the 'blockbuster drug of the century'