PPI Reclaiming Guide

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 and don’t accept liability for any damage or loss which may arise as a result of your reliance upon it.

If you’ve got or had a loan, credit or store card in the last six years, you may be able to reclaim £1,000s. The misselling of expensive Payment Protection Insurance (PPI) alongside these products has been rife. Lenders like Egg & A&L have had huge fines. This is a step-by-step guide, including free templates, to reclaiming loan and card insurance.

Can you switch expensive current PPI and save £1000's?

There’s nothing wrong with PPI for those who need it. It’s job is to cover loan or card repayments in case of accident, sickness or unemployment (or sometimes just accident and sickness). This is especially useful in current climes.

Yet if you got a PPI policy from your lender, it's likely you’re paying MASSIVELY over the odds, so you should first check if you can get the same elsewhere for less. There are a number of things to be aware of...

• The insurance cost isn’t in the APR

  If you get a loan with insurance the interest rate (APR) you pay is irrelevant: an 8.5% loan can be cheaper than a 7% loan. This is because the APR doesn’t include the insurance cost, just the cost of the interest (see Cheap Loans guide), enabling lenders to hide expensive insurance.

• You may only be able to claim for one year

  If you ever need to claim on your insurance, due to losing your job or being ill, many providers restrict each claim to 12 months, no matter how long your agreement runs for.

  So if you claim one year into a five year loan you won’t be covered for the final three years payments, even though you’ll be paying for the insurance.

  Sadly some bank PPI policies are so expensive, that the maximum payout if you claimed for a full year may only be roughly the same as the cost of the policy. E.g. you may pay £1,500 for the policy over the life of the loan, but the maximum it’d pay out is just £1,600.

• Standalone insurance can be over 70% cheaper

  If you need insurance, it’s possible to get similar cover at around a third of the cost, simply by buying a specialist insurance policy separate to the loan. For more details read either the Cheapest Loan Insurance or Cheap Credit Card Insurance guides.

• Cancel and switch expensive insurance

  If you already have a loan with insurance from the bank, you should be allowed to cancel it.

  First check if this is possible, then examine whether you truly need the policy. If you do then getting a standalone policy and cancelling the existing one should save you money, leaving less of your cash paying enormous commissions. See the Cheap Loan Insurance guide.

  This can be hugely powerful; after presenting a show on switching PPI for ITV1’s Tonight, I was inundated with people who’d saved thousands, including someone who was going to save more than £20,000 over the life of a secured loan.

Wondering if you can wipe out the whole debt?

The airwaves and classified sections are plagued with claims companies promising to wipe out pre-April 2007 debts by exploiting Consumer Credit Act loopholes. But are such claims really possible? We reveal the myths & reality as to whether you can get old loan/get credit card debts wiped out in the Can You Wipe Out Debts guide.

PPI exposed: Why it's so often missold

The real profit from selling loans often doesn't come from the products themselves, but from the insurance sold alongside. There are around 20 million PPI policies in the UK, generating around £5 billion a year for the companies involved. Yet it isn't the insurer that reaps most of the reward, it's the company selling the loan.

The cost of the insurance almost always dwarves the interest cost, so it’s unsurprising many believe this is the most over-priced financial product around.

Worse still in Jun 08, after a 15 month investigation into PPI, the Competition Commission found the following average insurance payout ratios apply:

• Car Insurance: 78%
• Home Insurance: 54%
• Mortgage PPI: 28%
• Personal Loan PPI: 15%
• Credit Card PPI: 11%

In layman's terms, this means while for every £100 insurers take on car insurance they pay out £78, on credit card PPI its just £11... meaning it is HUGELY profitable. Yet most of this profit goes to the lenders, not the insurance companies.

You CAN get your money back

The only silver lining to all this is it means misselling cases are easier. There have been thousands of success reports, and many more still due. Here are just a couple of MoneySavers’ success stories for inspiration:

"Just received notification that I’ll have my PPI refunded! I took out a loan in January 2003 and I took the PPI because they would not give me the loan without taking it, which shouldn’t happen.

I sent my letter and less than a week later they told me that I’d be getting £1,191 back! My letter stated that they had missold me the policy. My loan will be finished early now! No fuss and no hassle at all. Result!!"

The same can work on secured loans too:

"About two years ago I took out a £40,000 secured loan and was told I needed to also take PPI worth £7,200 or I wouldn’t be accepted. I did not know any different and stupidly took out the loan.

Recently I contacted my lender to complain but it said that I signed the agreement and that was that. I then contacted the Financial Ombudsman and a few months later I have just received a letter from my lender saying that they admit fault and taking advice from the FO they enclosed a cheque for all of the PPI plus interest, a whooping £8,500."

The ‘Have I Been Missold?’ Checklist

Before getting into this, if possible get hold of a copy of your policy’s terms and conditions. If you can’t find them, contact your lender to ask for a copy (but make sure it dates back to the time of your agreement as terms will change over time). Lenders can ask for £1 to provide this but not all do so you could include a cheque for £1 (don't send cash though) to speed it up a little.

The sellers of PPI have a responsibility to ensure that you understand the nature of the product and that it is appropriate for you.

All polices will have certain exclusions and you should have been told about them. As most policies are bought with a loan or credit card rather than standalone the key thing is...

What was said at the point when you were sold the product?

The following are the key misselling categories, if you fit one or more of these you probably have a case.

This covers anything from being told the insurance was compulsory, to not knowing you had even purchased PPI, to the fact you were already covered through work or your partner.

It also applies if the policy isn’t what you agreed to, you got store card cover in a shop and it wasn’t explained or you didn't realise it's a joint policy but only in one person’s name.

Does this apply to you? Expand the full General misselling briefing.

Lenders selling PPI polices are obliged to tell you about the specific criteria of the policy and to confirm it’s the right product for you. However, because PPI polices earn providers a high proportion of profit, staff are often highly encouraged to sell as many as possible, and are well remunerated for doing so, meaning misselling is rife.

When you contact a lender by phone or in person if they don’t give you fair, correct and reasonable information it’s likely you were missold. Due to the volume of complaints, the regulators are now hot on the heels of this issue.

Some common examples of PPI misselling

Were you told insurance was compulsory?

It’s a common complaint that consumers are told they must buy a policy from the same provider as the loan or credit card to be accepted for the product. Any company that subscribes to the banking code (see list) agrees it will not insist that you buy an insurance product from them, so although it can request that you have PPI from somewhere, it does not have to be from them.

Therefore if the salesperson:

• didn't make it clear the policy was optional,
• implied or stated the loan 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 that you felt you could not say no,
• would not let you continue with the loan application if you did not sign the insurance agreement as well,

then go to the how to reclaim section.

Did you already have insurance cover?

If you were already covered - for example you had a separate income protection policy or your employer provided an illness and redundancy package, and you informed the salesperson that 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 the how to reclaim section.

Have you tried to cancel your policy?

Prior to Mar 07 some contracts had terms that said you could not cancel the policy even if you had paid off your loan or had a change of circumstances. Since the FSA 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 or that you needed to take out a new agreement with different terms, go to the how to reclaim section.

Is the insurance term too short?

Until banned in May 09, long term loans were often sold with a single premium policy lasting for a maximum of five years, no matter how long the loan is for. If you’ve now checked your policy and found that it does not cover the full term of your loan, but thought that it did, the salesperson should have pointed this out. If not go to the how to reclaim section.

Do you have a joint loan but the insurance is only in one name?

If you’ve checked your paper work and have found that 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 the how to reclaim section.

Did you sign up for the finance in a shop?

If you got a store card or insurance on a car dealership loan, it 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.

Just realised you have insurance?

Have you just checked your loan agreement or credit card statements to find that you have been paying for insurance, but didn’t realise until now that you had it or what it's for? Some old agreements, particularly store cards, may have used pre ticked boxes requiring you to opt out of the insurance rather than opt in, which is unfair. Always check and if you’re paying for insurance you didn’t know you had go to the how to reclaim section.

In summary…

If you have an inappropriate PPI product and weren't told it was inappropriate or you don’t think you were given the full information on what the policy would and would not cover, send a letter asking for an explanation.

If you were unemployed or retired, then check if the policy included unemployment cover. If it did, the unemployment cover is worthless and this should’ve been pointed out to you.

If you were self-employed you need to check whether you were eligible for a payout if your business went bust (usually not) and if not, and it wasn’t pointed out, you may have a case.

Does this apply to you? Expand the full Missold unemployment cover briefing.

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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 meant a huge waste of money.

Those who were unemployed at the start of the policy (including students and stay at home parents), were almost definitely missold 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 missold?

Assuming the policy isn’t suitable, we must establish whether the salesperson bothered to check. Remember, it’s the situation you were in at the time 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 the cover was still suitable and been misinformed.

It’s likely you were missold 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 too

Most polices have an upper age limit of 65 or 70, after which you’re not covered for anything. If you were older than this when you took out your policy, you were definitely missold. If you have passed the age limit since taking out the policy, your cover and therefore payments should have stopped, but 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 is 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 missold?

Read the other categories to check there aren’t more reasons to complain and then write a letter to your lender. Full details and template letters in the How to reclaim section.

Most policies exclude existing medical conditions, meaning you are unlikely to be covered for any medical problems you have had in the past. This is something you should’ve been asked about and informed the policy could be affected.

Does this apply to you? Expand the full Pre existing medical conditions briefing.

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Lenders should ask about health issues when you get a policy, and if you weren’t informed the policy could be affected by medical problems 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 and 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 as providers often take a ‘broad brush’ 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 have been symptom free for a few years prior to taking out the policy, so do check your own paperwork carefully. If this applies to your policy, then you weren’t missold, so this section does not apply to you.

Other health related issues

As well as pre-existing health conditions, some general health problems are specifically excluded from many polices, such as stress. Check the terms of your own policy carefully to see if any particular conditions are not covered and if you were not told about such exclusions from the policy, or were incorrectly informed when you asked about them, you may have been missold.

What to do if you were missold?

Read the other categories to check there aren’t more reasons to complain and then write a letter to your lender. Full details and template letters in the How to reclaim section.

Many major providers, including Alliance & Leicester, Egg and Capital One have been fined for “not treating customers fairly”, and more are expected soon. If yours has, it’s very likely you’ve a case.

Does this apply to you? Expand the full list of Fined providers.

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The regulator, the FSA, has said it wants to see better practice and has fined several companies for failing to treat their customers fairly. More fines, which could be for up to £1 million, are expected.

Who’s been fined so far?

• Swinton: Fined £770,000 in Oct 2009 for serious failings and an unacceptable level of non-compliant sales (on cover for home or motor insurance) between Dec 06 and Mar 08 (when it stopped selling PPI). Swinton has said it will contact over 350,000 customers who paid for the PPI and offer a full refund, as well as pro-actively review previously rejected claims. More Info: Swinton.

• Egg: Fined £721,000 in Dec 2008 for serious failings in its credit card PPI sales by telephone between Jan 05 and Dec 07. Egg has said it will be writing to customers, asking them to call a dedicated number if they are concerned they were missold PPI, and will compensate where appropriate. More Info: Egg.

• Alliance and Leicester (A&L): Fined £7 million, the highest fine to date by far, in Oct 2008 for serious failings in its PPI telephone sales between Jan 05 and Dec 07. A&L has said it will be writing to all the customers concerned. More Info: Alliance and Leicester.

• 5 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: Fined £840,000 in July 2008 for serious failings in the sale of single premium PPI on telephone loans sold betweeen 14 January 2005 and 8 August 2007. It has also agreed to compensate customers if their policy is 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, between May 2006 and Feb 2007, without effective monitoring or training. 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 Jan 2005 and May 2007. More Info: HFC Bank

• Capital One: Fined £175,000 in February 2007 for failing to ensure that 50,000 customers buying credit cards and loans between January 2005 and April 2006 received important information about the policy. More info: Capital One

• GE Capital Bank Ltd: (supplies cards for Asda, Comet, Debenhams and Topshop among others): Fined £610,000 in January 2007 for inappropriate sales of its store cards and credit cards. More info: GE Capital Bank Ltd

• Redcats: Fined £270,000 in December 2006 for also 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 with you, but if it hasn’t you should definitely send a reclaim letter asking for justification that your policy was sold with your best interests in mind.

Other companies are likely to be fined too

The FSA is likely to announce further fines, this is important as it hugely strengthens your reclaim, so ensure you get the free weekly email to keep updated on this.

Did you buy online?

If you bought your loan or credit card online, reclaiming’s more difficult as the full T&Cs are usually available there.

An exception to this is if you purchased from a lender using pre-ticked boxes, meaning you had to opt out of the insurance rather than opt in. In July 07 all lenders agreed to stop doing this but if you took out an agreement before this date check your policy for insurance.

How to reclaim?

This is all about following a dance. Most people with a decent claim get paid out, but very few get it after the first complaint. Lenders deliberately try to put people off with rejections and sadly it works, yet follow all the steps through and you should improve your chances. Reclaiming almost certainly means that your insurance will be cancelled, as you are effectively saying it is not suitable to your needs, so only start the process if you definitely want your insurance to come to an end.

Martin's PPI Video Guide Either watch the full video (14 mins) on the right or click one of the links below: Chapters: Intro (1 min) What is PPI? (3 mins) Do you need it? (1 min) Slash the cost (2 mins) Was it missold? (4 mins) How to reclaim (3 mins) Watch the video fullscreen Close WARNING: This was recorded in Oct 07, small things may have changed so always check the article for up-to-date info.

How far back can you go?

Before starting, it's important to see if your claim is valid.

• Did your policy start in the last six years?

  If your policy started in the last six years, whether you're still using it or not: Reclaim and ask your lender for a copy of the paperwork if you no longer have it.

• Is your policy older but still active or ended in the last six years?

  If your policy started over six years ago and you are either still using it, or it ended within the last six years: Reclaim and ask your lender for a copy of the paperwork if you no longer have it. Your chances of success may be reduced if you have been aware of the misselling for some time, you have already complained or your account is very old.

• Is your policy older?

  If your policy ended over six years ago and you have the paperwork: Reclaim, although your chances of success are reduced, as it will depend on what you can remember about the sale.

  If your policy ended over six years ago and you do not have the paperwork: It's unlikely there will be records and unlikely the reclaim will be successful.

• Have you already claimed on the insurance?

  Until Jan 2010 it had been generally assumed you could not make a misselling complaint if you've already made a successful insurance claim because that would indicate the policy was suitable. Yet proposals from the regulator now mean more people could be entitled to compensation.
  
  Anyone who has claimed on a PPI policy can still submit a misselling complaint, though the chances of success are unclear. However even if you're not successful you may be able to cancel your insurance.

Stage 1. Write to the seller

Contact the company that sold you the policy asking for a refund. In Mar 2010 the banks and the Financial Ombudsman agreed a questionnaire, covering all details on the sale of a policy, that consumers should use to make their initial complaint.

If the seller was acting as an appointed representative of the insurance provider, it will probably tell you to contact the provider instead. Use the address of the branch you visited for your first contact; any follow up can be sent to the head office if necessary.

It's worth checking whether the company you're contacting was regulated by the FSA at the time of your sale. If either the lender or the seller (broker) were it's best to contact them first as you'll be able to go to the FOS for help further down the line if needed.

If a company isn't registered you don't need to complete the questionnaire, but it will help ensure you provide the full details of your claim and will be needed if you are able to use the Ombudsman later on, so doing it now could save time.

Fill in and sign a copy of the questionnaire below. You should also enclose copies of any paperwork that backs up your case and send the form by recorded delivery, keeping a copy yourself.

FOS Questionnaire: Microsoft Word version

It’s quite simple to fill in, though do take care. To help I've written a guide, which takes you through filling in the form step by step. It's written in Microsoft Word so you can easily cut and paste sections of it and/or print it out and have it next to you as you're filling in the FOS form. If you are still having problems filling it out call the Ombudsman on 08000 234 567 9 (or 0300 123 9 123 from a mobile).

The most important thing to understand is that in most cases a company’s first reaction is to reject your complaint yet this doesn’t mean you’ve no case either, it’s just a tactic. This isn’t about rights and wrongs, it's about commerce. It's far cheaper to say no, produce a legalese argument to befuddle you and hope you’ll cower in a corner.

So expect a reject and don’t be phased by it one jot. To help you remember your rights, we've penned a wee poem to help you remember...

And it's not just me saying that, even the Financial Ombudsman has formally complained to the regulator that some lenders are "deliberately trying to obstruct the Ombudsman process". They've been rejecting ALL consumers' initial requests to reclaim, even when they know if they get to the ombudsman 90%-100% of cases are adjudicated in the consumer's favour.

This is done as a way to prevent people who lack the determination to pursue the claims. So you must go into this expecting rejection at this stage, and understand it's just part of the process.

Stage 2. Now threaten the Ombudsman

If you've not been successful, now it’s time to get a little bit more militant. Send a simple follow up letter indicating that you’re not happy and would like it to look again at the case. You should also say that if it doesn’t agree then you will make a formal complaint to the Financial Ombudsman Service.

If you have been offered a settlement at this point, but you just don’t believe that it is high enough, then there is nothing stopping you writing back and giving an amount you would be willing to accept ‘without prejudice’. This means that if your lender chooses not to settle for this amount, it can’t use it against you later.

Stage 3. If all else fails complain to the FOS

If you still haven’t reached a satisfactory conclusion, it’s time to make a formal complaint to the Financial Ombudsman; the official independent service for settling disputes between financial companies and their customers.

The FOS is completely free to use, and will adjudicate on whether your claim should be paid out. It will look at your complaint (see some examples) and decide whether your policy was sold unfairly or unreasonably. It can only do so once eight weeks have passed from the date of your first complaint letter, unless the lender itself specifically suggests you go to the Ombudsman.

To make its decision the FOS will look at each case individually, so if yours is a matter of you saying one thing happened but your lender disagrees, the FOS will decide if it thinks the lender acted fairly. As the party with responsibility to provide full details of the insurance, the lender are expected to have more evidence on what happened to back up its case.

Currently, of the cases that need to go as far as the Ombudsman, two thirds are being 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.

Help with filling in the form

To make your complaint, just contact the Ombudsman and ask it to take on your case. You can either do this via the FOS website or by calling 020 7964 0500. After contacting it, you will need to fill in and sign a copy of its complaint form to explain your complaint and enclose copies of any paperwork that backs up your case.

FOS Complaint Form: Microsoft Word version or PDF version

It’s quite simple to fill in, though do take care. To help I've written a guide, which takes you through filling in the form step by step. It's written in Microsoft Word so you can easily cut and paste sections of it and/or print it out and have it next to you as you're filling in the FOS form.

The FOS will then send you a confirmation letter to say it will look into your case and get back to you if it needs any more information. Sometimes this will take a long time, usually around 6 months but maybe even up to a year, but don’t worry, you can then leave the matter to the FOS to resolve and it will contact you with any offers from your lender.

Also, see the Financial Fight Back guide for other complaints the FOS can help with.

Stage 4. Where the Ombudsman can't help

The Financial Ombudsman Service (FOS) can only help with complaints about companies regulated by the FSA. While all PPI sales from January 05 are regulated by the Ombudsman, some policies before that aren't.

• Bank sold policies
  
  Any provider that was fully regulated by the FSA prior to Jan 05 will be covered by the Ombudsman. That means all banks and building society loans should be fine.
  
  
• Other sellers
  
  If you got the product in 2004 or earlier, and the provider wasn't covered by the FSA before that, such as a Car dealership or some Hire Purchase arrangements, then the Ombudsman sadly has no jurisdiction. Yet always call the FOS and check first as it can help where lenders signed up to its voluntary scheme or were regulated by the GISC.
  
  In general if this happens the FOS will put you in touch with another organisation, either an official one or a trade body that may be able to hear your complaint; someone like the Finance & Leasing Association or Association of British Insurers.
  
  This does makes getting a payout more difficult, though it's still worth following it through. Please report your experiences in the PPI Non-FOS Reclaiming forum discussion.

Option 1: Use a claims handling firm/lawyer

If you're in this situation, reclaiming is more difficult, and for all but the most legally or financially literate, the DIY route may no longer be appropriate. There is a chance that the Citizens Advice Bureau may be able to help, but in general you will have to look at one of two sources...

• Claims handling companies
  
  There are a number of companies who now offer PPI reclaiming services. Many have just jumped on the bandwagon of the work done by reclaimers and they should be avoided... they take a chunk of the proceeds when this is usually something relatively easy to do using the free letters.
  
  Yet at this stage things are much more complex, and much more work is needed, so bringing in a paid body can be useful. Most of them offer 'no win no fee' deals, and will take a cut of any successful claim. While I'm no fan of these companies, some get results when going it alone would be a hassle.
  
  If you're picking a company, check out its reputation. NEVER pay them a penny, and try not to agree to one which will take any more than 25% of your compensation. Try asking how long it has been handling PPI claims and for references from other satisfied customers, which it should be happy to do if kosher.
  
  All claims companies must be regulated for claims management activities and will have a reference to check (e.g. CRM1234) on the Ministry of Justice database. Avoid anyone not on this list.
  
  
• Get a lawyer
  
  The 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/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.
  

Option 2: Take it to court yourself

If you've tried a claim through the trade organisation and it won't help, there is always the option of taking court action against the provider via the small claims system. The claim is generally on the grounds that it has misrepresented your contract (and therefore made it invalid) if it did not 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, 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 see the going to court section of the Reclaiming Bank Charges article and if you give it a try please feedback in the successes and failures thread; as all feedback is useful for other MoneySavers.

Please feedback your experiences

Things will continue to develop over time. Please give us feedback so that we can keep our article up to date and help as many people as possible by reporting your successes and failures in our forum.

How much will you get?

This is potentially big money. For loan reclaims we could be talking many thousands of pounds. Yet calculating the actual amount is difficult and often unnecessary, as the lender will do it for you.

However, it’s possible to estimate how much the insurance has cost, to get of how much you can reclaim (of course it then depends whether you’re entitled to all or just a portion of it).

Estimating how much the insurance cost

The amount of insurance is different from product to product.

Loans

Obviously if you know what the insurance costs per month, simply multiply this by the length of the loan to work out its cost.

If not, you can do a very rough estimate as follows. Work out the total cost of your loan, simply by multiplying the monthly payments by the loan length and then take 15% off the total. This is a typical insurance cost (although it can be anywhere between 10 and 30%).

The following table gives some examples:

Cards

The estimate is more difficult on cards as the amount you owe changes each month. Estimating is therefore far more of a 'guesstimate'. Yet there is a way to get a very rough idea.

Most card insurance plans cost roughly 80p per month per £100 of outstanding debt. We can therefore work out that for every £100 of debt you have averaged over a year, you’d pay £10 in insurance. In other words, roughly 10% of your outstanding debt in insurance each year.

The following table gives some examples: