If you’re in the UK and you’ve read any of the national newspapers, seen any high-street billboards or even turned on the television this year then you can’t have failed to hear about the PPI scandal rocking the country’s banks.
The story so far goes a little bit like this…
Before 2011, many people attempting to take out a loan or a credit card from banks in the UK were sold “payment protection insurance” at the same time. This would mean signing up to a scheme which involved paying a certain amount, per month, to your bank on top of any other debt repayments and obligations. The banks claimed that this money insured you against any inability to repay. If you fell behind on your repayments and had a good enough reason then the insurance would cover your repayments until you were deemed able to make them up again.
In theory this might have been a good idea. However, over time millions of people who had signed up to these schemes began to discover that they didn’t deliver on the promises made by the banks’ representatives. Many of them only paid out in very specific circumstances, making the insurance practically worthless for most customers. In other cases, peopled had been pressured into taking out the insurance by being told that they would not be allowed the loan if they didn’t. Before 2007 some banks even required people to opt out of this arrangement rather than opting in, without fully explaining the schemes to the people who paid for them.
In other words, millions of people had either been misled as to the benefits of these schemes, or hadn’t been told about them at all. They had been mis-sold.
Since then many consumers have mounted legal cases against the banks for misselling PPI, with the result that many have been forced to pay back the full amount received from consumers, in some cases. Over £9 billion has been set aside to repay to people who claim they have been missold PPI.
In the meantime a whole industry of “no win no fee” claims handlers has sprung up, offering to help you reclaim missold PPI insurance if you agree to hand over up to 30% to them in return. Many other people, however, are doing it themselves and keeping the entire amount. It’s free, it only takes a few letters, and many people received hundreds or thousands of pounds in refunded cash as a result.
So, if you think you’ve been mis-sold PPI the best thing to do is dig out all of the details of your original loan and figure out if you are eligible to make a claim. If anyone pressured you into taking out the loan, or if it was not adequately explained to you then you are very likely to be entitled to a refund. There have been many success stories of people reclaiming large amounts of money for very little effort, and many more people who don’t even realise they have been sold the policies. Just to be sure, we recommend you digging out the papers for any loans or credit cards taken out in the last few years.