Martin and Wendy
Updated September 2016
This is urgent for everyone who's had a loan, credit or store card, catalogue account, overdraft or car finance. The regulator in August reiterated plans to introduce a time-bar on claims, so check NOW if you were flogged worthless PPI and if you were rejected before and didn't go to the Ombudsman, try again.
Never pay a claims handler 30% you can easily reclaim £1,000s for free yourself. This is a step-by-step guide on how to join the millions who've had over £20bn of PPI premiums refunded, including free PPI complaint templates downloaded more than 6.3 million times how to deal with an offer and how to re-open a complaint.
In this guide...
Warning! While every effort's been made to ensure this article's accuracy, it doesn't constitute legal advice tailored to your individual circumstances. If you act on it, you acknowledge that you do so at your own risk. We can't assume responsibility & don't accept liability for any damage or loss which may arise as a result of your reliance upon it.
PPI claims FAQs
Follow the step by step guide to reclaim. It's a relatively easy process, yet many have questions so this FAQ section should help you see the lay of the land before you start (thanks to all who suggested questions).
If your question isn't answered here, it may be in the main guide below. Remember, the general rule is, if you think you were mis-sold, give it a go. If the bank rejects you, that doesn't automatically mean you don't have a case take it to the free Ombudsman service.
The PPI basics: what is it, how was it mis-sold?
Important. FCA reiterates its plan for anti-consumer claims deadline. What does it mean for you?
The regulator, the Financial Conduct Authority, confirmed in August it is set to introduce a time-bar which it believes will prompt consumers into action. Technically, it is still at consultation stage yet it's a fait accompli. But this is an anti-consumer move. How can it argue this is being done to protect consumers when the uphold rate at the Financial Ombudsman is still hovering around 60% (and was nearly 70% in the year to April)?
To go to the Ombudsman you have to first complain to the bank so it's likely banks are still wrongly rejecting claims, from over half of those who have been mis-sold.
The FCA's plan means putting a deadline in place that would hit two years from the date the proposed rules comes into force. The rules are unlikely to be in place before June 2017 so PPI mis-selling victims would have until at least June 2019 to complain. Of course, it is still only at consultation stage despite clear plans to go ahead so is still subject to change. See PPI claims time-bar for more details on the proposals.
So to be safe get a complaint in ASAP. You can complain about a product sold at any time, though here are some guidelines which may help. It's easier if your insurance was active in the last six years, but don't let this put you off.
Insurance started in the last six years: There's no issue here at all. Even if the loan's now paid off, you can start a reclaim.
Older insurance that's still active, or ended within the last six years: You can start a reclaim. The six-year rule applies to active insurance, so a policy taken out 12 years ago but paid off five years ago was still active within the key six year period.
If your policy ended over six years ago: The 'statute of limitations' means banks don't need to keep records that are over six years old. However, there is no official cut-off time so if you've still got the paperwork, while your chances of success are a little lower with older loans, many still do successfully reclaim.
What is PPI?
PPI stands for 'Payment Protection Insurance'. It's designed to cover your loan or credit card repayments for a year in the event of an accident, sickness or unemployment, or sometimes just accident and sickness.
Yet it's been widely mis-sold, and you could even have it without knowing. If you were mis-sold PPI, you may be able to reclaim £1,000s. See the mis-selling checklist.
Is every PPI policy bad?
No. Payment Protection Insurance itself isn't a bad product. But it's been widely mis-sold with thousands of loans, leaving many paying hundreds for potentially worthless cover.
The insurance cost often dwarfs the interest, so many believe it's the most overpriced financial product around. Sales staff were hugely incentivised to sell PPI whenever possible. Many were under so much pressure, they strayed far from the truth.
If you've got PPI, ask if you really need it. If you've a bank loan with PPI, you should be allowed to cancel the insurance. If you need PPI, getting a standalone policy and cancelling the existing one should save cash, as less will go towards big commissions. You can get similar cover at about a third of the cost. See the Cheap PPI guide.
Why has it been mis-sold so much?
Sales staff dressed as advisers were hugely incentivised to sell PPI whenever possible. Many were under so much pressure they strayed far from the truth, and much of the insurance cost went on huge commissions. The sellers were often trusted financial institutions, so sadly, many were left with mis-sold PPI.
When did PPI mis-selling start?
There's no specific start date the problems of mis-selling have been around for a long time. Martin was warning about them back in 2000, and others before that. Claims can generally start on policies from the 1990s (possibly earlier). The financial regulator started fining PPI companies in 2006, but a big improvement wasn't seen until 2011.
How much will I get back?
Potentially, big money. Generally, the amount you pay for loan PPI is about 15% of your balance, but it could be up to 30%. It doesn't sound much, but it quickly mounts up.
For loan reclaims it could be many thousands of pounds. Yet calculating the actual amount's difficult and often unnecessary, as the lender will do this for you.
It's possible to estimate how much the insurance has cost to see what you can reclaim. It then depends whether you're entitled to the full amount, or just part of it.
One way of doing this is to work out what your monthly loan payment should have been. Use our loan calculator to enter your loan amount, length and APR and compare to what you were paying. Here are some examples if you were paying more, it's likely PPI was included.
- A £5,000 loan for 5 years at 5% should be £95 a month.
- A £10,000 loan for 10 years at 10% should be £130 a month.
- A £20,000 loan for 3 years at 20% should be £740 a month.
Once you've worked out the amount, you can add the actual cost of any interest (so you're in the same position you would've been without the insurance), plus the 8% interest a court would give to compensate (this was 15% for premiums paid before 1 Apr 1993).
The provider should also correct any further losses you've had as a result, such as any arrears charges due to taking the loan. But if you've an outstanding debt to the lender, they can use the money to pay it off.
In some circumstances your offer may be lowered due to a technical process called 'comparative redress'. It's not compulsory for you to accept this decision and we've discovered banks have been underpaying, often wiping a third off refunds. See the Comparative Redress section for more info on how to challenge if this happens to you.
If you're in any doubt your bank has offered you the correct amount call it to ask. See our independent leaflet for more info on what to look for on your offer letter.
Estimating the size of your reclaim
If you know your monthly PPI cost, simply multiply this by the length of the loan to work out its cost.
If not, you can do a very rough estimate. Work out the total loan cost by multiplying the monthly payments by the loan length, then take 15% off the total. This is a typical insurance cost, though it can be anywhere between 10-30%. Here are some examples:
Loans: Estimating the reclaim size
|Monthly repayment||Loan length||Total cost (length x repayment)||Estimated insurance cost (15% of total)|
|£100||3 years (36 months)||£3,600||£540|
|£125||5 years (60 months)||£7,500||£1,125|
|£150||5 years (60 months)||£9,000||£1,350|
|£200||7 years (84 months)||£16,800||£2,520|
|£150||20 years (240 months)||£36,000||£5,400|
I've claimed on my PPI, can I still make a mis-selling complaint?
You can still make a complaint for mis-selling, though your chances of winning redress are likely to be much lower. Do use this as an opportunity to consider whether the insurance is still appropriate for you, or if you could get similar cover for less elsewhere see the Cheap PPI guide.
If I want to keep my PPI, can I save money on it?
Yes! If you got PPI with a loan, it's likely you're paying MASSIVELY over the odds. Check if you can get the same for less elsewhere:
Standalone cover can be cheaper
Some bank PPI policies are so pricey that the maximum payout for a year may be less than the policy cost. It's possible to get similar cover separately at about a third of the cost. See the Cheap PPI guide for info.
Cancel and switch expensive insurance
If you've already got a bank loan with PPI, you should be allowed to cancel the policy. First, ask if you really need it. If so, getting a standalone policy and cancelling the existing one should save cash, as less will go on enormous commissions.
Beware switching if you've a pre-existing condition
Most new policies won't include pre-existing conditions you have when a policy's taken out. If this applies, don't change it. For ways to switch, see Cheap PPI.
Will they cancel my PPI if I reclaim it?
Reclaiming almost certainly means your insurance will be cancelled you're effectively saying it isn't suitable for your needs. Only start the process if you definitely want your insurance to end.
I wasn't stupid enough to get PPI, what do I get back?
We get asked this quite a lot, but there are fundamental problems with the question. Being mis-sold PPI doesn't make you stupid. It often involved lies and deceit from supposedly trusted institutions.
Those who reclaim are only getting back cash that was wrongly taken from them. For more, see Martin's blog: 'Wish I'd been stupid enough to get PPI'.
I don't have full details, what can I do?
I've forgotten who my loans / cards were with, how can I find out?
I don't have my PPI account number or terms, how do I check if I had PPI?
The easiest way to check is to contact your lender. Most will be able to tell you whether you've had PPI, either now or at some point in the past. For example Nationwide has an enquiry form you can complete online to find out. See contact details for the main banks in the PPI reclaiming's getting easier MSE News story.
If this doesn't work, what's needed is likely to depend on how old your policy is. Some lenders only need a name and address (remember to let it know if yours has changed), others may need more details.
It may be easier if you have the original agreement and terms. Under the Consumer Credit Act, if your account's still open, you've a legal right to get your agreement from the lender for £1.
If your account's closed and they can't find your policy terms it'll be harder to process your complaint. Contact your provider with as much detail as you can, or ask for a full breakdown of your account. It can cost £10 to get this.
To help with getting copies of any documents, use the template letters in step 1.
My bank says I didn't have PPI. Is there another way to check?
If your bank says you didn't have PPI, as a backup you can ask who it used as its underwriter (the company that decides whether you're eligible for the insurance). You can then contact this organisation directly to see if a policy exists.
What name should I look for to spot PPI on the paperwork?
Look for any mention of an insurance fee or product that will cover your payments if you lost your job through accident, sickness or unemployment.
It may be called 'payment cover', 'protection plan', 'ASU', 'loan protection', 'retail payment protection', 'loan care' or similar. If unsure, ask the lender. If you find something on your paperwork you didn't know about, investigate.
How do I start a complaint?
Write or phone the company that sold the policy and ask for a refund it's as simple as that. You'll find all the information on what to do in our step-by-step section below.
What does my complaint need to say?
Just write down what you remember about the sale of your loan. Our PPI questionnaire guide will take you through the Ombudsman form step by step. It's a Microsoft Word file so you can easily cut and paste sections, or have it next to you as you fill in the form. If you still have problems filling it in, call the Ombudsman on 0800 0234 567 (0300 1239 123 from a mobile) and it will be able to answer your questions.
Do I send my complaint to the bank or Ombudsman?
In the first instance, send it to the bank. If the bank turns down your complaint, you can then send the same form to the free and independent Financial Ombudsman Service later.
Which address do I send my complaint to: local branch or head office?
Many of the main banks have specific PPI departments. Find their contact details in the how to do it section below.
For other firms, contact the company that sold the policy, using the address of the branch you visited first. If the seller was the insurance provider's 'appointed representative', it may tell you to contact it instead.
My conversations with the bank were verbal / I've no other evidence, help!
Mis-selling's often systemic in other words, it was part of the standard sales pitch to sell incorrectly so it's still worth trying. The lender has responsibility to give full details, so is expected to have more evidence. The bank may know it was likely all customers were mis-sold during a specific period.
If it won't settle it, make a complaint to the Financial Ombudsman Service. This independent service settles disputes between financial companies and their customers. It's completely free, and will decide if your complaint should be paid.
I can't remember for sure if they said I had to have PPI, should I reclaim?
If the account's still open, or has been in the last six years, there may be sale records. So if there's a chance you weren't fully informed, make a complaint. Many banks were involved in systemically mis-selling in other words, they mis-sold as part of their process. If this applies, it's likely you'll win your case. See the mis-selling checklist for further reasons.
My debt's been passed to a collection agency. Who do I contact to reclaim?
Contact the company who sold you the insurance it may refer you to the debt collection agency if it has your files.
I got a text message saying I was owed £1,000s of PPI money back. Is it true?
No. It's spam pure and simple. They don't know you from Adam, but they put an amount in to make you think there's some form of database they've secretly tapped into.
The fact you got this text is absolutely meaningless, it's done randomly. You may be owed PPI money, you may not. (As proof even Martin gets them regularly and he's definitely never had PPI.) See more claims handler FAQs.
'Can I reclaim' queries
I was rejected by my bank a while ago (possibly years), can I start a new complaint?
The PPI story is always changing and we hear new stories of bad practice all the time. If you're at all concerned that your past complaint wasn't dealt with fairly you have the right to carry on to the independent Ombudsman, or ask your lender to reopen your case.
If you received the bank's final response within the last six months take your case to the Ombudsman. Follow the steps below to carry on.
If it's been over six months, the Ombudsman can't take on the case until it's been via the bank again. To do that, just file a fresh complaint with the bank using the templates below if needed. Ensure you include any new information that you think affects your complaint and state why you're asking it to reopen the case.
Then if your bank rejects you again, you can go to the Ombudsman. However, do note that you are time-barred from going to the Ombudsman with complaints if it's over six months since rejection so it may not take on your complaint this is likely to be decided on a case-by-case basis.
The Ombudsman has ruled in favour of my bank. Is there anything else I can do?
To be mis-sold, the policy needs to have been inappropriate for you at the time you got it, eg, if they lied that you had to have it, or unemployment cover was sold to the self employed.
The Ombudsman is independent and impartial, and so if it doesn't believe you were mis-sold, you may just need to accept that. You could go to court, but that's difficult and riskier.
One bit of hope is the recent 'Plevin case'. In this case the court ruling held that Susan Plevin was treated unfairly because she wasn't told about the large amount of commission (71.8%) taken from her PPI payment. The FCA says firms should generally consider a complaint on the grounds of an unfair relationship between lender and borrower if commission was above 50%.
This effectively means that if the cost of PPI was made up of more than 50% commission and you weren't told this, then you should get the difference back. As typical commission was 67% most people are likely owed. Yet the regulator is consulting on how to deal with it, so watch this space for more info.
My PPI was on an old account, how far back can I reclaim?
You can complain about a product sold at any time though here are some guidelines which may help. It's easier if your insurance was active in the last six years but don't let this put you off.
Insurance started in the last six years: There's no issue here at all. Even if the loan's now paid off, you can start a reclaim.
Older insurance that's still active, or ended within the last six years: You can start a reclaim. The six year rule applies to active insurance, so a policy taken out 12 years ago but paid off five years ago was still active within the key six year period.
If your policy ended over six years ago: The 'statute of limitations' means banks don't need to keep records that are over six years old. However, there is no official cut-off time so if you've still got the paperwork, while your chances of success are a little lower with older loans, many still do successfully reclaim.
Will I have to close my account / lose my overdraft / be penalised if I reclaim?
No this shouldn't happen. The Financial Ombudsman Service ruled against closing accounts during the bank charges campaign, so it's no longer allowed. If you bank with the same provider and you want full protection, it may be worth opening an account with another provider before you start (see Best Bank Accounts) but we've never heard of it happening.
Will reclaiming PPI hit my credit rating?
No, it won't hit your Credit Rating and won't go on your credit file. At worst, in theory the bank you reclaim from could keep its own record, which may affect future applications to that bank. But we've not heard of this happening in practice.
Can I make more than one PPI complaint?
Yes. You can reclaim for each policy you were sold, whether they're with the same or different banks. Just complete a separate form for each complaint.
I've already reclaimed bank charges, can I still reclaim PPI?
Yes. You can reclaim PPI whether or not you've already reclaimed bank charges.
Can I reclaim if I'm still paying off the loan?
Yes though be aware any refunds may come off your balance (but it means you'll owe less if that happens).
Can I reclaim if the loan's repaid and I'm no longer a customer?
Yes. What counts is the fact you were mis-sold when you got the policy, not whether you still have the loan. The fact the debt's cleared doesn't mean you weren't mis-sold, so you can still reclaim. See the mis-selling checklist to find out.
I've had a debt management plan / IVA / been bankrupt, can I reclaim?
Yes, your finances now aren't relevant to whether you were mis-sold or not.
However, it's worth being aware that if you have a debt to the lender, either on this account or from a debt in the past, it's likely to use the cash towards your debt. It can do this without your permission and is unlikely to change its offer, even if you had ill health or are in financial difficulties.
This also applies to any policies purchased before a bankruptcy or insolvency order were made. Whether you've been discharged or not these 'assets' remain part of your estate so you are unlikely to get a refund. For more info read this guidance on Gov.uk.
An extra word of warning: if you've debt problems there's usually no point using a claims handler. If your arrears are larger than your potential payout you're unlikely to get the money, but you'll still have to pay the claims handler fee.
You can still complain yourself using this guide to help, then use the money to pay your lender what you owe it.
I've read my PPI company never pays out. Can I still reclaim?
Yes, and be careful where you get your info from. All PPI companies should pay out if they've mis-sold.
You may have heard this because your company's one of the rare ones from before Jan 2005 which isn't covered by the Financial Ombudsman Service. If your PPI's from a bank or building society, this doesn't affect you reclaim away. But if it's a car leasing firm or catalogue from before this date, it may not be covered by the Ombudsman.
This means the Ombudsman has no jurisdiction, so these cases can be harder to argue. But it doesn't mean you won't win; start the process and see how you get on. If you're going to need to go to court, it's one of the rare cases where it may help to use a 'no win, no fee' claims handler. Use the Should I use a claims handler? tool to find out.
My lender's been taken over. Can I still reclaim?
Yes. In buying another company, the new owners are usually liable for its debts and for paying customers. Sometimes the liability stays with the old provider, but complain to the new firm and it'll let you know if that's the case.
As an example, Egg's credit cards have now been taken over by Barclaycard, so Barclaycard's liable for Egg's past PPI mis-selling.
My lender's gone bust, can I still reclaim?
Yes. If your lender's bust and you were mis-sold, you'll need to contact the Financial Services Compensation Scheme (the lender must have been FSA/FCA-regulated for you to do this). This is the official body which insures the liabilities of finance companies are met. See Safe Savings for more info the process is very similar.
My financial adviser / broker sold me another lender's PPI. Who do I contact?
Contact the company that sold you the policy in this case, the financial advisor or broker. If the seller acted as an 'appointed representative' of the insurance provider, it may say to contact the provider instead.
Can I reclaim PPI if the policyholder has died (eg, parent / husband / wife)?
Yes. Any monies owed become part of their estate, so the person who inherits is entitled to reclaim (let the executor know too). If there's no will this follows the rules of intestacy, see Gov.uk. Yet it's worth noting there may be problems proving what happened at the time of the sale if only the policyholder was present.
I had a joint loan with my partner but we're now divorced, does this affect my case?
This depends on the lender. Some need two signatures to release the info. Some only pay part to the person complaining, and keep the rest for the partner. Others pay it all to one person if the other ever reclaims, they'll tell them to find their ex.
Can I still reclaim if I live abroad?
Yes. If you were mis-sold PPI, the fact you now live abroad is neither here nor there you were mis-sold and can reclaim. See the mis-selling checklist to find out.
My lender was based in Jersey. Can I reclaim?
You can reclaim from a company based anywhere in the world if it mis-sold you PPI. Yet the company needs to be UK regulated to get help from the Financial Ombudsman Service. Not all Jersey-based companies are UK regulated, so ask the company or call the Ombudsman to check.
'Was I mis-sold?' queries
I had PPI on a catalogue, overdraft, store card, car loan or credit card?
Yes. If you were mis-sold payment protection on them, you can reclaim. However, some non-bank policies from before 2005 weren't regulated at the time, making it trickier. For store cards and credit cards, see the full Credit Card PPI Reclaiming guide.
I was told to buy mortgage PPI, was it mis-sold?
Yes, but mortgage PPI wasn't as commonly mis-sold, so it's less of an issue. Remember, good PPI protects your mortgage repayments in the event of accident, sickness or unemployment see the Mortgage Arrears Help and Mortgage PPI guides for more.
Mortgage lenders can legitimately say that having PPI is a condition of allowing you a mortgage but they aren't allowed to say it must be theirs.
I wanted PPI when I signed up, was I mis-sold?
The company you got it from had a duty to ensure the policy was appropriate for you. For example, if you were paying for unemployment cover but were self-employed when you got the PPI, it's likely it was inappropriate, meaning you may have been mis-sold. See the mis-selling checklist.
What counts as mis-selling how do I know?
The company who sold you the insurance (this is often the bank or lender) has a duty to ensure the PPI was appropriate for you. Many also lied by saying it was compulsory, or sometimes even added it without asking you. Use the full PPI mis-selling checklist to see if you were mis-sold.
How does the bank decide if my complaint's eligible?
It should look at whether the info you were given when you signed up meets the regulator's guidelines. These state the bank shouldn't have pressured you to buy, should have checked you were eligible, told you all the exclusions and price, and ensured the sale was fair.
My bank has written to me to say I should complain. What do I do?
This only applies to some people those identified as being 'systemically mis-sold' (ie, mis-sold as part of the sales process). If you're contacted just complete the forms with as much information as you can and post it back to the lender.
Of the people who have sent their forms back in the past, around 90% are found to have been mis-sold so you've a very high likelihood of having your complaint upheld and getting your money back.
I made a redundancy claim but found my PPI won't cover it, was I mis-sold?
If you were led to believe you had redundancy cover when this wasn't the case, you were mis-sold. See the mis-selling checklist.
I was employed when I got PPI. I'm now self-employed, was I mis-sold?
No (well not for that reason anyway). The company had a responsibility to ensure the policy was appropriate at the time you took it out.
So the fact the policy isn't appropriate now isn't a reason it was mis-sold if it sold to you correctly at the point of sale.
However, if it sold unemployment cover when you were self-employed at the outset then it's likely it was mis-sold. And if you told the company you were changing to self-employed and it incorrectly said you were still covered you were almost definitely mis-sold. See the mis-selling checklist.
I tried to cancel PPI but the lender said I should keep it, so I did. Is this mis-selling?
If you were mis-sold, eg, told you had to have PPI, you can complain. However, being encouraged to keep the cover as it may be useful (and all terms were explained) isn't a reason to reclaim. See the full mis-selling checklist.
I had free PPI for a few months but forgot to cancel. Can I reclaim?
The company should've ensured the policy was appropriate for you. So at the point you were paying for it, you could still have been mis-sold. See the mis-selling checklist to find out more.
I'm in the armed forces, am I entitled to reclaim PPI?
Yes, being in the forces doesn't change anything. The key is whether the policy was appropriate for you. Some policies may have excluded those in the forces from unemployment cover, so you're more likely to have a case if this wasn't explained.
Don't listen to claims companies who try and make your cases seem more difficult, and almost make it look like they're doing a favour to the forces in fact they're charging you for something you can likely do yourself.
The Ombudsman, payments & more
My offer letter included a leaflet from MSE and Which?, did you write it?
We did. We worked with Which? and five banks and a credit card company, to produce a leaflet to be included with PPI offer letters. If Lloyds, Barclays, HSBC, Capital One, NatWest or the Co-op make you an offer, it's likely the leaflet will be included.
The aim of the leaflet is to help people check whether the PPI offer they've received is fair, and what their rights are if they feel it isn't.
We also want people to know if they're not happy with their offer, they can still complain to the free Financial Ombudsman service. You don't need a claims handler to help.
The bank rejected my reclaim should I go to the Ombudsman?
Yes, yes, yes, yes and yes (hope that's clear enough). You need to do it within six months of the rejection.
The banks are not the final arbiter here the FREE Financial Ombudsman Service is. See the Going to the Ombudsman section. A high proportion of PPI cases that get to the Ombudsman are awarded in the consumer's favour. But to get there, the bank must have rejected your reclaim first.
So if the bank rejects you, just see it as a step in the process. Don't be disheartened, and don't believe everything it tells you about why you've been rejected. Take it on!
How long should I give my bank before I go to the Ombudsman?
The Financial Ombudsman Service can decide whether your policy was sold unfairly (see examples). It can only do this after eight weeks from your first complaint to the bank UNLESS the lender itself suggests you go to the Ombudsman before that.
I'm still waiting on the Ombudsman, how long will it take?
This is a bit of a nightmare for some. Using the Financial Ombudsman Service is simple, and the best way to go, but it takes far too long. PPI reclaiming numbers have exploded. While the Ombudsman's working hard to get it together, it may take a couple of years to be settled. So don't bank on getting your reclaim (and payout) sorted quickly.
If you're in the midst of immediate, severe and provable financial hardship, let the Ombudsman know. It may be able to prioritise your case.
I was turned down by the Ombudsman a few years ago, can I try again?
If you've been turned down by the Ombudsman and the evidence is the same, it's unlikely your case will be heard and unlikely the decision will change.
My bank agreed to refund PPI but I'm still waiting, can I speed things up?
Sadly this is a common, frustrating problem. Banks say it should be within 28 days, but it could be 8-12 weeks. You'll get interest on the payout up to the date it's issued though, so that's a minor consolation. If the delay's unreasonable, there's nothing to stop you contacting it to say you aren't happy, and asking for extra compensation for distress and inconvenience.
Can a PPI refund be taken to pay debts, eg, an overdraft / loan?
Yes. Banks call this 'setting off'. Most banks have the right to transfer cash from your bank or savings accounts to pay off other debts held with them, such as credit cards or loans.
Yet taking the money shouldn't leave you in financial hardship. If it does, tell your bank and complain to the Financial Ombudsman Service if you think you aren't being treated fairly. See the Setting Off guide for full info.
I've been offered a goodwill payment. What does this mean, and can I get more?
A goodwill payment's an offer of a payout without the company admitting it did anything wrong. Companies rarely say they're in the wrong they simply offer some cash to stop your complaint going further. If you don't think it's enough, you can negotiate for more. If you still don't think it's enough, you can complain to the Financial Ombudsman Service.
Our understanding your offer letter leaflet will help you decide if your offer is fair and what to do if you think it isn't. You don't need the help of a claims handler to do this, it's free and easy to do yourself.
I accepted a goodwill offer from my lender, can I reclaim more?
Usually not, although if you're in any doubt your bank has offered you the correct amount call it to ask. Our understanding your offer letter leaflet will show you what to look for.
An example of this may be if your lender made you an offer including something called comparative redress.
A few lenders, including Barclays, Lloyds and NatWest, have been using this system since late 2012, and it may have meant they underpaid you, often wiping a third off your refund.
It's used when your bank decided it shouldn't have sold you one type of PPI, but another was more suitable. It'll offer you the difference between what you actually paid and what you would have paid, if you'd been sold, in the bank's opinion, the correct product.
It could mean you've been swindled by £100s so read the Comparative Redress section below for more info on how to challenge the decision if it's happened to you.
I've received two payments, is the interest paid separately?
We think some lenders split payments into two parts, eg, when your account's still open and needs restructuring, the interest can be paid separately. If you're not sure what you've received and why, contact your bank to ask.
I was offered a refund but the bank changed its mind, help!
We haven't heard of this happening, and neither has the Financial Ombudsman Service so ask for the full reason for the change, and complain to the Ombudsman if you aren't happy.
Do I need to pay tax on my refund?
Not on the refund, and thanks to a new allowance, you probably won't pay income tax on the interest you receive as compensation. In brief, a payout's usually made up of three elements:
- A refund of what you paid
- A refund of the interest you paid on the premium
- Statutory (8%) interest based on the total amount you were owed (or 15% for premiums paid before 1 Apr 1993)
Historically you only needed to pay tax on this last element. Let's say your payout for a loan taken out in 2000, including any interest you paid, was £1,000 and you'd been owed this for three years. The 8% interest means you'd get £240 on top so the total becomes £1,240. You'd pay tax on the £240 at 20% (basic taxpayer rate), so that's about £50. At the higher rate of 40% it'd be about £100.
The reason for this is it's assumed if you hadn't paid for PPI, you'd have kept the cash in the bank earning interest. Fortunately, after much back and forth, HMRC has confirmed that interest on PPI refunds will fall under the remit of the new personal savings allowance (PSA) (which allows you to earn up to £1,000 of interest income per tax year, tax-free).
However, since October 2013 this has been automatically deducted from your refund. Before that point, from the major banks, only RBS and NatWest automatically deducted tax for their current customers. Barclays (including Barclaycard), Halifax, HSBC, Lloyds TSB and Santander didn't.
Even with the introduction of the PSA, the interest you're paid will still be paid with the tax deducted. This means that if you haven't used your full PSA or you're a non-taxpayer, then you'll be able to claim back the tax deducted on the interest paid using form R40 (or form R43 if living overseas) and sending it to HMRC.
Contact your tax office, or call the income tax helpline on 0300 200 3300 if you need more info.
Can I wipe out the whole debt?
Some claims companies promise to wipe out pre-April 2007 debts by exploiting Consumer Credit Act loopholes. This was always dubious at best, but in 2009 this was closed for good in court so the short answer is 'No'. See the MSE News story: Debt write-off loophole closed.
Where can I get more help?
There's a lot more information in the full step-by-step guide below. Yet if you've a particular question not answered there, try posting it in the PPI Reclaiming board in our forum. Someone there may be able to help (though do remember anyone can suggest an answer, so always double check before relying on it).
If you need further help call your bank or alternatively the Financial Ombudsman Service can answer questions on 08000 234 5679 (0300 1239 123 from a mobile).
If your question hasn't been answered above, please let us know in the PPI FAQs discussion.
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Get £1,000s back on mis-sold PPI
The UK's biggest protection racket isn't run by thugs in back alleys, but the genteel staff of Britain's banks. For years they were made to steal £1,000s, but now you can get your money back.
We've won in court paving the way for the millions that've been mis-sold to reclaim. Reclaiming yourself is easy, lets you keep the full amount and it's completely FREE.
If you've got a loan, urgently check whether it included insurance. If it did, you could be paying £1,000s for potentially worthless cover and you might not even know about it.
Why is reclaiming possible?
Because what the banks did was wrong. Since 2006, the financial regulator, the FSA/FCA, has fined PPI companies left, right and centre for "not treating customers fairly".
Then in August 2010 it finally decided the whole industry needed to tidy up its game and it set out a list of rules providers must follow to proactively find and compensate consumers who were mis-sold a policy.
In October 2010, the banking trade body, the British Bankers' Association, decided to take legal action against these plans and unfairly placed most cases on hold.
However, in April 2011 the High Court ruled in favour of mis-sold consumers, and the banks eventually accepted the verdict, gradually lifting the hold on complaints.
Why was PPI mis-sold?
There are some 20 million PPI policies in the UK, previously generating a whopping £5 billion a year for the companies involved.
The insurance cost almost always dwarves the interest, so many believe this is the most overpriced financial product around.
Worse still, in June 2008, after a 15 month investigation into PPI, the Competition Commission found the following average payouts:
- Car insurance: 78%
- Home insurance: 54%
- Mortgage PPI: 28%
- Personal loan PPI: 15%
- Credit card PPI: 11%
Simply put, this means...
For every £100 insurers take on car insurance, they pay £78. On loan PPI they pay out just £15, meaning it is HUGELY profitable.
Most of this profit goes to the lenders, not the insurance companies. The only silver lining? It means mis-selling cases are easier to win! See the success stories below for inspiration.
Some inspiration before you begin
If you've been mis-sold you CAN get the money back. And you can do it yourself and for FREE. Success stories have been flooding in from those who've easily reclaimed £1,000s.
Here are a few for inspiration, see PPI Successes for more:
Thank you so much for giving me the courage to reclaim my PPI and for making it so easy I have received £35.000. It has literally been life-changing.
Last week my bank said it wouldn't uphold my complaint, now it's offered £6,000. I only wrote as MSE told me to.
I took your advice and have claimed PPI from all the companies we had loans with. The result has been overwhelming, approximately £19, 000 back... thank you.
I wrote to my bank about several loans I'd had with them since 1998. I got a letter back offering me just under £13,000 compensation for mis-sold PPI, very quick turnaround as well, money was in my account in less than a week from sending the agreement back!
Even if you said you didn't want PPI, it's still worth checking, as one site user found...
I actively refused PPI on every loan/credit card but they'd still been charging me. #Sneaky
How it may have been mis-sold?
How easy your reclaim is likely to be depends on how you signed up originally:
If you bought online ...
Nowadays, many apply for loans online. If you signed up on the internet, reclaiming's more difficult as the full terms are usually available there, and the onus was on you to have understood them.
But there's an important exception. If you signed up with a provider that was using pre-ticked boxes, you may have had to opt out of the insurance rather than opt in.
In July 2007, all lenders agreed to stop doing this, but if you took out a loan before this date, check urgently you may have bought insurance without knowing.
How you could have it without knowing...
It's scary, but true many still have loans from when the picture was like this:
You want a £5,000 loan over five years. You've seen it advertised at a cheap 7% rate, so you call up.
You: "I'd like a £5,000 loan over five years please."
Bank: "I presume you've seen our competitive interest rates."
You: "Yes, can you give me a quote please."
Bank: "Sure, our fully protected loan is £125 a month."
Most people would find it virtually impossible to mentally calculate how much the monthly repayments should be, so £125 sounds fine.
It's a brilliant hustle. The answer contained two little words that make 'em a fortune "fully protected". They mean you're also being flogged expensive insurance.
Actually, the cost of the loan at 7% should be £100 a month the remaining £25 is to pay for the insurance. That means if you'd just got the loan you'd have repaid the £5,000 borrowed plus £950 in interest.
Yet the insurance adds £1,500 over the life of the loan; that's MORE than the interest cost and it's almost pure profit for the bank!
Widespread mis-selling has left many with unnecessary cover. Even if you need it, if you got it through your lender it's likely you're paying four times more than you need to.
If you bought face-to-face or on the phone...
Here, the salesperson was responsible for ensuring you both understood the terms of any PPI and that the policy was appropriate. This also applies if you took out the policy online but were later called about the insurance, as often happened. This form of mis-selling has often been systematic, with staff being forced to sell policies or face lower pay.
You may have been told insurance was compulsory. It isn't, and that alone counts as mis-selling. Plus, the self-employed, unemployed, retired, those with pre-existing conditions, or who are covered elsewhere, have all commonly been flogged unnecessary policies.
So if you've got a case, write and complain. To reclaim, you'll need to write up to three times (templates for all of them are here); the last being to the free Financial Ombudsman Service, though there's a chance you could get a payout sooner.
As all of this is free, the worst case scenario by reclaiming is... you lose the cost of three stamps.
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If you think you may be a victim of PPI mis-selling, follow this step-by-step guide:
Step 1. Check your policy
Before starting, it's important to see if your complaint's valid. See the PPI Basics questions in the FAQ section.
The first step is to find out whether you had insurance on your account. Either write or phone the company that sold your loan and ask.
Most big lenders will be able to tell you by phone whether you've had PPI, either now or at some point in the past. See contact details for the main banks in the PPI reclaiming's getting easier MSE news story or just try the main customer service number for the firm.
Want to see your paperwork?
While it isn't always necessary, as you can start a reclaim without it, if you don't have a copy of your agreement or T&Cs you can contact your lender to ask for a copy (make sure T&Cs date back to the time of your agreement, as terms will change over time).
What to ask depends on whether your account is still open or is closed. There are template letters for both below to help.
Open account? Here, lenders can ask for £1 to provide a copy of your agreement but not all do so. You could include a £1 cheque (don't send cash, though) to speed it up a little.
Closed account? You can ask for a full breakdown of your whole account, specifically including the insurance. If it takes longer than 40 days, report it to the Information Commissioner. This can cost £10 so you could include a £10 cheque (not cash).OPEN account CLOSED account What to do if you have problems opening the letter
Calculate how much you may be owed
If you want to calculate the exact amount, you'll need to ask for a full breakdown, whether the account is open or closed. Though this isn't actually necessary, as if the company agrees the reclaim it should do it for you.
When you get your paperwork it should detail the loan amount, the insurance amount and the type of policy that you have or had. If the amount is monthly you need to calculate the total cost over the life of the policy.
Step 2. The PPI mis-selling checklist
Now it's time to go through the checklist below. Sellers of PPI have a responsibility to ensure you understand the nature of the product, and that it's appropriate for you.
All policies will have exclusions, and you should have been told about them. As most policies are bought alongside a financial product rather than on their own, the key issue is:
...what was said at the point you were sold the product.
Were you told it was compulsory?
It's a common complaint that consumers are told they must buy a policy from the same provider as the loan in order to be accepted for the product. This is mis-selling.
Any company that subscribes to the Lending Code (see list) agrees it won't insist you buy an insurance product from it. Therefore if the salesperson...
- Didn't make it clear the policy was optional or tell you about any cooling off period.
- Implied or stated it would be more expensive if you didn't take the insurance.
- Implied or insisted you take out their policy to qualify for the product or help with your application.
- Was very pushy when selling the product, so you felt you could not say no.
- Would not let you continue with the application if you did not sign the insurance agreement as well.
If one of the above applies, then go to the how to reclaim section.
Didn't realise you had cover?
Have you just checked your loan agreement to find that you've been paying for insurance, but didn't realise until now that you had it, or what it's for?
Some old agreements (pre-July 2007) may have used pre-ticked boxes so you had to opt out of the insurance rather than opt in, which is unfair. Always check this, and if you're paying for insurance you didn't know you had, go to how to reclaim.
Were you told or sold the wrong thing?
This covers anything from the fact you were already covered through work or your partner, the policy was not what you agreed to, the insurance term was shorter than your loan and you didn't realise, or if you thought it was a joint policy but in fact it was only in one person's name.
Does this apply to you? Expand the full general mis-selling briefing
Those selling PPI polices are obliged to tell you about the criteria of the policy and to confirm it's right for you. If you speak to someone when applying for a loan, they need to consider your circumstances. Buying online places more reliance on you doing checks.
However, because PPI polices earn providers large profits, staff were often highly encouraged to sell as many as possible, and were well paid for doing so, meaning mis-selling was rife.
If you contacted a provider by phone or in person, and if they didn't give you fair, correct and reasonable information, it's likely you were mis-sold.
Some common examples of PPI mis-selling
Did you already have insurance cover?
For example, if you had a separate income protection policy or your employer provided an illness and redundancy package, and you informed the salesperson you had this cover, but they insisted you also had to take their insurance; or you weren't asked if you had any alternative cover, go to how to reclaim.
Do you have a joint loan, but the insurance is only in one name?
If you've checked your paperwork and have found all names responsible for paying back the loan are not covered under the insurance which is unfair in itself as either could be chased for money if you get behind with payments and were told or thought that all names were covered, go to how to reclaim.
- Is the insurance term too short?
Until they were banned in May 2009, long-term loans were often sold with a single premium policy lasting for a maximum of five years, no matter how long the loan was for. If you've checked your policy and found it didn't cover the full term of your loan, but you thought it did, the salesperson should have pointed this out. If the salesperson didn't, go to the how to reclaim section.
Have you tried to cancel your policy?
Before March 2007, some contracts had terms that said you couldn't cancel the policy even if you had paid off your loan or had a change of circumstances. Since the then FSA (now the Financial Conduct Authority) looked into these refund terms, cancelling is now possible for all current and future contracts. So if you tried to cancel your policy and were told you weren't allowed to, or that you needed to take out a new agreement with different terms, go to the how to reclaim section.
Did you sign up for the finance in a shop?
If you got a loan in a store, such as a car dealership, the insurance was likely to be sold by someone with no financial background, meaning more room for error, and a whole catalogue of misinformation could have been given. If this happened to you, send a reclaim letter to check the insurance was sold in your best interests.
Were you told the total price?
Before you agreed to take the loan, the lender should have told you the full cost of the insurance, both the monthly cost and the total price over the policy, so that you could tell if it was affordable. If you weren't given the costs in advance, or if you had a single premium policy that cost more than it would have paid out, or you weren't told you would pay interest on the insurance cost, go to how to reclaim.
If you have an inappropriate PPI product and weren't told it was inappropriate, or you don't think you were given full information on what the policy would and wouldn't cover, ask for an explanation.
Self-employed, unemployed or retired?
If you were unemployed or retired, check if the policy included unemployment cover. If it did, the unemployment cover's worthless this should've been pointed out.
If you were self-employed, check whether you were eligible for a payout if your business went bust (usually not) if not, and it wasn't pointed out, you may have a case.
Does this apply to you? Expand the full mis-sold unemployment cover briefing
Have you been paying for a policy which includes unemployment? If you don't need unemployment cover, perhaps because you don't work or are self-employed, and mentioned this when you took out the policy, or were never asked about your employment status at all, a reclaim may be possible.
Is the policy suitable?
The unemployment element of PPI is only suitable for people who were working at the time they took out the policy, therefore you should have been asked about this at the time of application.
Example question: Are you in permanent employment, self-employment or contract employment for more than 16 hours a week?
Of course, if your policy only covers accident and sickness, with no unemployment element, this section doesn't apply to you.
What is classed as working?
Providers have different definitions, so it's important to examine your policy in detail. If you're self-employed, check whether your specific set-up is covered.
As the unemployment element is a substantial part of the insurance cost, many who are self-employed have been paying for a semi-useless policy and this could've been a huge waste of money.
If you were unemployed at the start of the policy (this includes students and stay at home parents), you were almost definitely mis-sold the insurance as, obviously, you wouldn't be covered for losing your job. The same applies if you knew you were going to become redundant or retire when you purchased the policy.
If it isn't suitable, were you mis-sold?
Assuming the policy isn't suitable, you need to establish if the salesperson bothered to check. Remember, it's the situation you were in when you got the cover that counts. So if you were an employee then, but are now self-employed, that's not their fault unless you've subsequently asked if it was still suitable and been misinformed.
It's likely you were mis-sold if either:
- A. You made the salesperson aware of your situation and they suggested you get it anyway.
- B. You weren't asked about your employment status at all.
Age is an issue
Most polices have an upper age limit of 65 or 70, after which you're not covered. If you were older than this when you took out your policy, you were definitely mis-sold.
If you've passed the age limit since taking out the policy, your cover and therefore payments should have stopped. If they haven't for any reason, you'll at least be entitled to a refund of payments made since passing the age limit.
This situation's rare, as providers' records should flag up someone's age being too high from their date of birth, but do check.
What to do if you were mis-sold?
Read the other categories to check if you've more reasons to complain, then write a letter to your lender. Find full details and templates in the How to reclaim section.
Had any medical problems in the past?
Most policies exclude existing medical conditions, meaning you're unlikely to be covered for any medical problems you've had in the past. You should've been asked about this, and informed the policy could be affected.
Does this apply to you? Expand the full pre-existing medical conditions briefing
You should have been asked about health issues when you got your policy. If you weren't, or were never asked about your medical history, a reclaim may be possible.
Example question: Have you had any illness, accident or other treatment which resulted in you being off work for more than 14 days?
What is a pre-existing condition?
Each provider has its own rules, but most are strict. It may decide whether to pay an insurance claim based on what it considers to be reasonable for you to have known about before the policy started.
If you make an insurance claim on health grounds, insurers may ask for medical records or proof you didn't have the problem when you took out the policy, and will probably turn it down if you've had a similar medical problem before.
This is one of the biggest reasons insurance payouts are rejected. Providers often take a 'broad brush strokes' approach; for example, if you had a bad lower back, they may decide not to pay for other unrelated back problems.
Were you asked?
Salespeople are not obliged to have a detailed medical discussion, but if they didn't mention medical exclusions at all, the policy could be void.
If you've had medical problems in the past, this is not enough to make a reclaim. The key point is whether, at the time of application, you were told this was an important part of the policy and were asked to disclose any past health issues.
Some insurers provide medical cover if you've been symptom-free for a few years prior to taking out the policy, so check your own paperwork carefully. If this applies to your policy, you weren't mis-sold, so this section doesn't apply to you.
Other health-related issues
As well as pre-existing health conditions, some general health problems are excluded from many polices, such as stress. Check the terms of your policy carefully to see if any conditions are not covered. If you weren't told about such exclusions, or were incorrectly informed when you asked about them, you may have been mis-sold.
What to do if you were mis-sold
Read the other categories to check if there are also other reasons to complain, then contact your lender. Find full details and templates in How to reclaim.
Has your provider already been fined?
The regulator has said it wants to see better practice. Many major providers, including Lloyds, Liverpool Victoria and Capital One have been fined for "not treating customers fairly". If yours has, it's very likely you've a case.
Does this apply to you? Expand the full list of fined providers
- Lloyds Banking Group: Fined £117,000,000 in June 2015 for failing to treat their customers fairly when handling PPI complaints between March 2012 and May 2013. More info: Lloyds Banking Group
- Clydesdale Bank: Fined £20,678,300 in April 2015 for serious failings in its PPI complaint handling processes between May 2011 and July 2013. More info: Clydesdale Bank
- Lloyds Banking Group: Fined £4,315,000 in February 2013 for failings in their systems and controls that resulted in up to 140,000 customers receiving delayed payment between May 2011 and March 2012. More info: Lloyds Banking Group
- The Co-operative Bank: Fined £113,300 in January 2013 for unfairly putting complaints on hold during the legal challenge in 2011. More info: The Co-operative Bank
- Carcraft: Fined £91,000 in May 2012 for the poor monitoring of PPI sales between April 2007 and September 2008. More info: Carcraft
- Swinton: Fined £770,000 in October 2009 for serious failings and an unacceptable level of non-compliant sales (on cover for home or motor insurance) between December 2006 and March 2008, when it stopped selling PPI. Swinton said it would contact over 350,000 customers who paid for the PPI and offer a full refund, as well as proactively reviewing previously rejected claims. More info: Swinton
- Alliance and Leicester (A&L): Fined £7 million in October 2008 for serious failings in PPI telephone sales between January 2005 and December 2007. A&L said it would write to all customers concerned. More info: Alliance and Leicester
- Five motor retailers:GK Group Limited, George White Motors Limited, Ringways Garages (Leeds) Limited, Ringways Garages (Doncaster) Limited and Park's of Hamilton (Holdings) Limited were fined a total of more than £175,000 in Aug 2008 for exposing a total of 2,175 customers to the risk of being sold unsuitable PPI policies. More info: Motor retailers
- Liverpool Victoria (LV): Fined £840,000 in July 2008 for serious failings in the sale of single premium PPI on telephone loans sold between 14 January 2005 and 8 August 2007. It agreed to compensate customers if their policy was not appropriate and to refund interest automatically. More info: Liverpool Victoria
- Land of Leather Ltd:Fined £210,000 in May 2008 for allowing its sales force to sell PPI without effective monitoring or training between May 2006 and Feb 2007. More info: Land of Leather
- HFC Bank, also trading as Household Bank and Beneficial Finance: Fined £1,085,000 in January 2008 for putting customers at an unacceptable risk of being sold PPI when it was not suitable for them. Failings took place in branches between January 2005 and May 2007. More info: HFC Bank
- Capital One: Fined £175,000 in February 2007 for failing to ensure 50,000 customers buying credit cards and loans between January 2005 and April 2006 received important information about the policy. More info: Capital One
- Redcats: Fined £270,000 in December 2006 for not having adequate systems and controls in place to minimise the risk of unsuitable sales. More info: Redcats
- Regency Mortgage Corporation: Fined £56,000 in December 2006 for not collecting sufficient information during a PPI sale to ensure its recommendations met customers' demands and needs. More info: Regency Mortgage Corporation
- Loans.co.uk: Fined £455,000 in October 2006 for not having appropriate systems and controls to minimise the risk of unsuitable sales. More info: Loans.co.uk
Are you a customer of one of these firms?
If you're a customer of one of these companies, it may have already been in touch. If it hasn't, you should send a reclaim letter asking for justification that your policy was sold with your best interests in mind.
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Step 3. Contact your lender
Write to or phone the company that sold the policy and ask for a refund. In the old days this often meant following a dance thankfully, it's much easier now.
It's sometimes possible to deal with your whole complaint by phone. Barclays' customers can also start a complaint via the PPI portal once logged into online banking. Find the contact details for the main banks in the PPI reclaiming's getting easier MSE News story. If it works, great. If not, put it in writing see the templates below.
How to do it: complete a simple questionnaire
Fill in and send a copy of the Financial Ombudsman Service's questionnaire below. For help getting the details together, see the full details section of the FAQs.
You can either do this via the Ombudsman's online form which allows you to upload the paperwork to back up your case and submit your complaint online, without the need to print and post anything or you can use one of the forms below...Editable Word document Printable PDF version
And remember if you complete a paper form, include copies of any paperwork that backs up your case, post it by recorded delivery to your lender and keep a copy for yourself.
Whichever route you choose, to help, we've written a guide to take you through it, step by step. It's written in Microsoft Word so you can easily cut and paste sections or have it next to you as you fill in the form.
If you're still having problems, call the Ombudsman on 0800 0234 567 (0300 1239 123 from a mobile).Ombudsman questionnaire help
What to do if you're having problems opening the guide
The most important thing to understand is: don't be put off if you're rejected. You may also need to go to the Ombudsman later, but you need to have written to the lender first.
Received an offer from your bank?
At this stage you could hear back from your bank with an offer to refund your PPI premiums.
That's great news but before you jump for joy, have a read of the Did your bank underpay you? section below to check you've received the full amount you're entitled to.
Some offer letters may also include a leaflet from MSE and Which? to help you check your PPI offer is fair, and know your rights if you feel it isn't. Here is a copy of the leaflet, let us know if you received it and whether you found it useful in the MSE Forum.
Rejected by your bank? Restart your complaint
If you submitted a PPI reclaim in the past, and didn't take it to the Ombudsman, then it's worth restarting your complaint. More than 60% of cases escalated to the Ombudsman have been upheld in the consumer's favour a shockingly high figure, given these are complaints that banks have already turned down!
If you tried to reclaim within the last six months, and your bank rejected your case, you can go straight to the Ombudsman (see below). But, if you complained more than six months ago, you need to restart your reclaim.
Remember to put in details of your last complaint, including any reference numbers if you have them. Explain that you're unhappy with the bank's decision, and ask it to look again at your case. Don't forget to add that you plan to take your complaint to the Ombudsman if it's rejected again.
Step 4. Write to the Ombudsman
If you still haven't reached a satisfactory conclusion, it's time to make a formal complaint to the Financial Ombudsman Service. It's important to understand that if your bank didn't help follow the ode below...
This is the official independent service for settling disputes between financial companies and their customers. The Ombudsman is completely free to use, and will adjudicate on whether your complaint should be paid out.
It'll decide whether your policy was sold unfairly or unreasonably (see some examples). It can only do so once eight weeks have passed from the date of your first complaint letter, unless your bank sends a final letter within the eight week period.
While the process of using the Ombudsman PPI claim form is simple, and the amount of money you could receive is massive, it's not usually quick. Your case may take a couple of years to be settled, so don't count on the cash now.
How to make a complaint
Just contact the Ombudsman and ask it to take on your case. It will then look at each case individually, so if yours is a matter of you saying one thing happened but the company disagrees, the Ombudsman will decide if it thinks the company acted fairly.
As the party with responsibility to provide full details of the insurance, the lender is expected to have more evidence on what happened to back up its case.
In the last few years, of the cases that needed to go as far as the Ombudsman, around 65% were awarded in consumers' favour. And even if yours isn't, there is no penalty for losing it just means you don't get the money back.
Let it know your story
If you haven't already filled in the PPI questionnaire in Step 3 you'll need to do this now. Enclose copies of any paperwork that backs up your case. If you need help at any stage call the Ombudsman's helpline on 0800 0234 567 (or 0300 123 9123 from a mobile).
Everyone also needs to fill in a copy of the Ombudsman's complaint form:
You can either do this via its online form which allows you to fill out the PPI questionnaire at the same time or you can use one of the forms below...Editable Word document Printable PDF version
Again, it's quite simple to fill in, though do take care. To help, we've written a guide which takes you through the questions step by step. It's written in Microsoft Word so you can easily cut and paste sections, or print it and have it next to you as you're filling in the Ombudsman's form.Ombudsman complaint form help What to do if you're having problems opening the guide
The Ombudsman will then send you a confirmation letter to say it'll look into your case and get back to you if it needs any more information.
Sometimes this will take a long time, maybe even a couple of years as the Ombudsman deals with huge numbers of complaints. But don't worry you can leave the matter to the Ombudsman to resolve and it will contact you with any offers from your lender.
If you think the Ombudsman wrongly turned you down
The Ombudsman's decision is usually made by an assigned adjudicator, but if you disagree with the result, you can ask for a formal decision to be made by one of the official ombudsmen at the service. This usually takes several months as it involves a detailed investigation into your case, but don't be afraid to push your complaint further if you think the initial decision isn't right.
After that, while the finance company must accept the Ombudsman's decision, you still have the right to take the company to court see the 'Use a claims handling firm?' section below if you don't agree with the result.
It's also worth noting that if you feel the Ombudsman hasn't handled your case correctly, eg, there have been unnecessary delays, you can ask for a senior manager to review it. If that doesn't resolve things you've a right to go to the Independent Assessor, though this is only about quality of service, not the actual decision made.
For other complaints the Ombudsman can help with, see the Your Financial Rights guide.
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Did your bank UNDERPAY you?
The letter's hit the doormat and it's good news. You're getting a refund and it says you'll be put back into the position you would have been in had you not taken out PPI in the first place.
But, hang on, before you get too excited, there's an extra sting in the tail being inflicted by some of the banks, which means you might not get as much money back as you'd hoped. And it goes by the name of comparative redress. Catchy eh!
If Barclays, Lloyds or RBS/NatWest offered you a PPI refund on a LOAN from 2012, you may be owed £100s more.
What is the problem?
There are two types of PPI. One is added in full at the start of a loan (known as a single premium) and the other is added to your account monthly (also called a regular premium).
If your bank has decided it shouldn't have sold you a single premium but it should have sold you a regular premium instead you've been offered something called 'comparative redress'. It's basically suggesting it wasn't wrong in selling you PPI, it just sold you the wrong type.
If it's made this call, your offer will be the difference between what you actually paid and what you would have paid, if you'd been sold, in the bank's opinion, the correct product. It could mean you've been swindled by £100s or £1,000s.
For example, if the full refund of your single premium would be £1,000, and the cost of a regular premium would have been £400, you'd only get a refund of £600.
What products does this apply to?
It'll only be used for PPI taken out with a loan and not other types of PPI, such as credit card, store card, mortgage, catalogue, overdraft or car finance insurance.
You're unlikely to be affected if your case has been to the Ombudsman, as it would have already looked at this part of your complaint.
Are they allowed to do this?
Yes. Since the High Court ruled in favour of mis-sold consumers in April 2011 comparative redress became part of the regulator's rule book, so they are well within their rights to use it.
Not only that, but there's also a strange rule that says how much they are allowed to charge for the replacement PPI policy. It says:
The firm should pay to the complainant a sum less the amount the complainant would have paid for the alternative regular premium payment protection contract. The firm should, for the purposes of redressing the complaint, use the value of £9 per £100 of benefits payable as the monthly price of the alternative regular premium payment protection contract.
This means, even if the different type of PPI your bank suggests you should have been sold didn't actually exist at the time you were sold the PPI (which was usually the case) your bank is allowed to charge you £9 for every £100 you borrowed. So, on a loan of £1,000 the policy would have cost £90.
When are they allowed to use it?
The rules say this can only be used as long as it is done so "fairly" and consistently. It's often been used when the bank decides you had no other way to repay your loan if you were ill or lost your job, so you needed a way to protect your payments.
It wasn't used straight away though. A couple of lenders started in late 2012 and early 2013. Others soon followed suit but some have since stopped. See which lenders below. But the point is:
It's ONLY for loan PPI reclaims made from late 2012
A group of claims handlers found that over the last year up to 30% of PPI offers made by some providers included comparative redress, with claimants affected being around £730 worse off on average. See the MSE News Story for more.
Which lenders are doing it?
We contacted the major banks and building societies and the following confirmed they use comparative redress or have offered it in the past:
- Barclays offered comparative redress between October 2012 and October 2013.
- Lloyds Banking Group has offered comparative redress since February 2013 and continues to do so.
- The RBS Group has offered comparative redress since early 2013.
The following providers have confirmed that they've never used comparative redress:
HSBC says there may be a handful of customers who were offered comparative redress, but it was never part of the bank's formal complaints process.
How to spot if you had comparative redress
Dig out your PPI offer letter and look for the mention of comparative, or alternative, redress. If you no longer have the letter ask your bank to send you a copy.
It could also be referred to simply as a different type of PPI, a monthly policy, or something that would 'cost £9 for every £100 of your monthly repayment'.
If you're not sure, call your bank to ask "Did my offer contain comparative redress?". See contact details for the main banks in the PPI reclaiming's getting easier MSE news story.
How to challenge the decision
Whether you received your refund offer in the last week or over a year ago, if you disagree you would have bought this different PPI it's NOT compulsory for you to accept your bank's decision and you can get your money back EVEN if you've already received a payout.
Contact your bank
If you believe you never needed PPI in the first place, simply call your bank to tell it why. You are able to rightly reclaim what is yours.
Examples of when you might want to challenge a decision include when you already had cover from work or savings to cover it; you repaid the loan early or refinanced so there was no need for loan insurance.
This should just be a matter of making a quick phone call to make sure your bank had all of the information it needed to make its decision, but if you'd like to put your request in writing our template letter may be able to help.
Can the Ombudsman help?
The free Financial Ombudsman Service can help with most cases if you think your bank's not playing ball.
Complaints are time-barred from going to the Ombudsman if it's over six months since your last contact with your bank. But don't let that put you off.
Call it on 0800 0234 567 (0300 1239 123 from a mobile). See its leaflet on Comparative Redress.
As the use of comparative redress is only recently coming to light the FOS said it's happy to be a point of call for enquires and will look at taking on cases, new and old, on a case-by-case basis.
If you've tried this, please let us know how you got on the PPI comparative redress discussion
When won't the easy route work?
The Ombudsman can only help with complaints about FSA/FCA-regulated companies. All PPI sales from January 2005 are regulated by the Ombudsman, but some earlier policies aren't. Any provider that was regulated before this will be covered by the Ombudsman so all banks and building society loans should be fine.
Sadly, if you got PPI in 2004 or earlier and the provider wasn't FSA/FCA-regulated (such as car dealerships, window installer or some hire purchase arrangements), the Ombudsman has no jurisdiction. This makes reclaiming trickier, though it's still worth trying.
Call the Ombudsman to check it'll put you in touch with any other organisations that may be able to help, including the Finance & Leasing Association, Association of British Insurers or the Financial Services Compensation Scheme if your lender's gone bust.
Claims handler FAQs
I get unwanted cold-calls and texts from PPI companies, how can I make them stop?
It is illegal for UK companies to call any individual who has indicated they don't want sales calls.
If you don't want to receive marketing calls, join the Telephone Preference Service register. Once registered, it takes about 28 days for calls to be stopped, including live calls. See the Stop Cold Caller guide for full info.
For texts, there are two options you can follow. While they won't completely stop the spam, the more of us that do this, the less spam we're all likely to get in future.
Option 1 is to report the text to your network provider. The big networks have a simple, free method to help you do this. Just forward the message to 7726 (spells SPAM), making sure it includes the senders' number. Vodafone customers need to add an '8' and Three customers need to add a '3' to the beginning of this.
Option 2 is to report it to the Information Commissioner's Office (ICO). This helps them monitor bad practice and investigate firms or individuals who may've broken the law. See our Stop Spam Calls and Texts guide for ways to report your spam.
A company's kept my initial fee after I pulled out, help!
Check the contract to see if you can get the fee back if you cancel. Some claims management firms (sadly, it doesn't apply to them all) say their commitment fee won't be more than £20, so the difference should be fully refunded.
If you paid by credit card you may be able to get a refund from your card company under Section 75 if it was over £100 (full info in the Section 75 guide). If so, it's likely this is your best bet contact your card company.
I'm using a claims handler but I'm not happy, what can I do?
Fear not, since the start of 2015 the Legal Ombudsman has been able to help with complaints about claims management companies. If you feel as though you've received poor service the process is similar to using the Financial Ombudsman Service.
First, make your complaint to the claims handler you've been dealing with. It has eight weeks to reply, but if it takes longer or you're not happy with its response you can ask the Legal Ombudsman to help. Just fill in the form on its website and email the form back or call 0300 555 0333.
It's free to use and independent and has the power to make firms pay compensation, reimburse costs or provide other forms of suitable redress where it finds there has been poor service. It's also happy to give guidance on how to start a complaint if you give its enquiry line a call. Or you can ask it a question in the ask the ombudsman MSE forum thread.
One extra point to note is that, as it's a new scheme consumers can currently submit claims to the Ombudsman for issues going back to 5 October 2010, as long as they first complain to their claims handler. This complaint could be submitted now, or have been done so in the past.
However, for anyone complaining about a problem that occurred after 28 January 2015, the Ombudsman will only be able to take complaints within six months of someone receiving a final response from their claims handler.
The claims company says I've a better chance if I use it, is this true?
No. There's no evidence whatsoever for that, so you should avoid it as it's not an honest player. You can reclaim yourself, for free, without giving any of your payout to a claims company just follow this guide.
How do I know if a claims handler's any good?
Check what they tell you against our picking a claims handler checklist.
Is it best to reclaim yourself or use a company? Is there one you recommend?
We don't normally believe in using claims handlers they take usually take about 25% of the proceeds, plus VAT, and it's easy to do yourself. Many people give away £1,000s unnecessarily when they could keep all the reclaimed cash themselves, and only need to send one letter or make a short call.
There are some circumstances where using a claims handler can work. Try our quick 'Should I use a claims handler?' tool first, as you may be able to do it for less. Reclaiming's easy, and we've free templates to help.
Plus read Martin's blog: Is it worth using a PPI claims company? 10 things you need to know.
Going to use a claims handler anyway?
If you're considering this route, before doing anything else, use our quick 'Should you use a claims handler?' tool below, as the vast likelihood is you can do it cheaper yourself.
If you're intent on using a claims handler regardless, then it's imperative you do the right checks. Use our checklist: What to check when picking a claims handler.
Possible alternative: Use a lawyer to take it to court yourself
An alternative is to find yourself a local lawyer willing to take the case on, or a no-win no-fee legal firm (some claims handlers link with or use them).
After all, from this point on it's likely to get litigious so a lawyer should help. In fact, a legal letter may make a company with a flimsy argument settle quite easily.
Yet if you are going to hire a lawyer, ensure you discuss the fees beforehand and compare it to the maximum you can reclaim.
Taking court action
If you've tried a reclaim through a trade organisation and it won't help, there's always the option of taking court action against the PPI provider via the small claims system. The complaint is generally on the grounds that it's misrepresented your contract (and therefore made it invalid) if it didn't give you the full facts about the product or ask for all the required information.
This can actually be quicker than using the Ombudsman but will involve costs, eg, £50 for smaller amounts, up to £300ish for larger reclaims although you will get these back if you win and there's always the risk you'll have to argue it in court.
If you have good grounds, and understand the legal arguments, then do consider it. There's a good chance it will force the PPI company to settle, but there are no guarantees.
For further details on how to take county court action, look at the Small Claims guide and the taking court action section of the How To Complain guide. If you give it a try, please let us know how you've got on in the Successes and failures forum thread.
Please tell us your experiences!
Things will continue to develop over time. Please let us know how you get on so that we can keep our article up to date and help as many people as possible by reporting your PPI successes and failures in our forum all stories are useful for other MoneySavers.