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.
- 3 Russian girl takes her own life after parents find pornography on her computer
- 4 Ball pool for adults opens in London
- 5 Amal Clooney gives excellent response to fashion question at European Court of Human Rights
9 reasons Greece's experiment with the radical left is doomed to failure
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
Have we reached 'peak food'? Shortages loom as global production rates slow
Greece elections: Syriza and EU on collision course after election win for left-wing party
British grandmother Lindsay Sandiford faces execution by firing squad in Indonesia
Liberal Democrat minister defends comments suggesting immigration causes pub closures
iJobs Money & Business
£13000 per annum: Recruitment Genius: This Pension Specialist was established ...
£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...
£25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...
Competitive salary & benefits!: MBDA UK Ltd: MBDA UK LTD Indirect Procurement...
Day In a Page
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village