Martin Lewis: Why it's worth checking if you were mis-sold PPI
The UK's biggest ever financial scam wasn't done by dodgy blokes in back alleys, but by bankers in pin stripe.
Yet now the regulator, the FCA, has given in to banks demands to protect their balance sheets and put a deadline on reclaiming PPI.
More than £20billion of PPI has been repaid so far, and I suspect it’ll be £30 billion before we’re done.
Everyone who HAS or EVER HAD a loan, credit card, store card, mortgage, overdraft or catalogue debt, should sit up and take note of these five facts:
1. Now, just having had PPI means most were mis-sold.
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2. The deadline’s 2019, but act ASAP to beat the queue.
3. Don’t assume ‘it’s not me’ – even if you said ‘no’ to it.
4. Don’t pay to reclaim. Free tools can do it for you.
5. A typical payout is £3,000 – so it’s worth your time.
For full help and my free reclaiming tool go to www.mse.me/ppi (Over 6.5m of my free template letters have been downloaded, getting people an estimated up to £5bn back). Here’s a quicker Q&A …
Q. I’ve heard of it, but what exactly is PPI mis-selling?
PPI stands for ‘payment protection insurance’ an insurance policy sold to cover a year’s repayments on debts in case of accident, sickness or unemployment, and there’s nothing wrong with that.
Yet for years banks saw it as a cash cow, and systematically mis-sold this insurance – as it made them more profit than the loan itself. T
he banks lied that it was compulsory or would get you a cheaper rate, gave it to people who didn’t need it, couldn’t use it, and even added to some people’s loans after they’d said ‘no’ to it.
Reclaiming means you get back all the money you wrongly paid it (and interest).
Q. When is the deadline?
The regulator, the FCA has said the last day you will be able to put in a claim for PPI mis-selling is 29 August 2019.
While that sounds a long time away, from this August it’ll spend millions promoting the cut off, so the system is likely to get clogged up, therefore go quickly to avoid being stuck at the back of the queue.
Q. I had PPI but what counts as mis-selling?
Typical examples include; they lied that PPI was compulsory, it’d cut your loan costs, it was added without asking, or even after you’d said ‘no’.
They had a duty to ensure it was suitable for you. For example, you were self-employed but got unemployment cover, or you had a past medical condition they didn’t ask about.
Q. Why are you saying “Now just having had PPI means most were mis-sold?”
The regulator also confirmed that from 29 August this year, a new category of mis-selling called ‘Plevin’ (named after a court case) comes into play.
It says that if more than 50 per cent of the cost of your PPI went to pay commission to the lender from the insurer, and you weren’t told it, then you’re due the extra back, plus interest.
As the average commission for loan PPI was 67 per cent and banks almost never mentioned it, this means most people who had PPI are likely due money back.
Lenders will be forced to write to 1.2 million people who were previously rejected and may now be owed due to Plevin.
Though ridiculously it’s not ordered them to send these letters to everyone whose commission was over 50 per cent, so most will still need to take action.
Q. How do I know if I had PPI?
You have to check, and as you can go back as long as you like (some reclaim on 20-year old long closed loans) don’t assume you didn’t.
One way it was mis-sold was to add it without asking, or even adding it after you’d said ‘no’.
* Check your old loans paperwork: It may have been called PPI or something like “payment insurance” or, “accident or sickness cover”.
* What if I can’t remember my lender? Your credit report shows all lending active within the last six years. You can get Experian’s totally free from www.mse.me/creditclub and Equifax’s via www.callcredit.co.uk* What if I haven’t got paperwork? If you haven’t got your paperwork you can ask the lender for it (going back six years).
If it refuses you can force it under the data protection act. If it’s more than six years, and you don’t have the paperwork, sometimes there’s little you can do.
Q. How do I got about reclaiming, do I need a company?
No. There’s no need to pay a claims firm 30 per cent of your payback (often £1,000s) to do this.