Reclaim PPI for Free £1,000s for mis-sold insurance

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.

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 dwarves the interest, so many believe it’s the most overpriced financial product around. 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.

I’ve 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.

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.

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 many 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.

No, 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 ‘statue 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.

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 £750 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.

The provider should also consider correcting 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.

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:

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.

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 over 70% 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.

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.

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’.

Check your credit report. It lists any debts that were alive within the last six years, even if they're now closed. You've a right to see credit files for £2 from Equifax, Experian and Callcredit, but it's possible to do it for free - see the Free Credit Rating guide.

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 card 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.

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.

Look for any mention of an insurance fee or product that will cover your payments in 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.

Use our PPI questionnaire guide to 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).

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 Financial Ombudsman Service later.

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.

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.

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.

Contact the company who sold you the insurance - it may refer you to the debt collection agency if it has your files.

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.

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 ‘statue of limitations’ means banks don’t need to keep records that are over six years old. However, there is no offical 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.

No - this shouldn't happen. The Ombudsman 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).

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.

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.

Yes – you can reclaim PPI whether or not you’ve already reclaimed bank charges.

Yes - though be aware any refunds may come off your balance (but it means you'll owe less if that happens).

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.

Yes, your finances now aren't relevant to whether you were mis-sold or not.

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 but if it leaves you in financial hardship, tell the bank and it may change its offer.

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 Insolvency Service.

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 claim yourself using this guide to help then use the money to pay your lender what you owe it.

Yes, and be careful where you get your info from. 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 Ombudsman. 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.

If so, 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.

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.

Yes. If your lender's bust and you were mis-sold, you'll need to contact off 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.

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.

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 HMRC. Yet it's worth noting there may be problems proving what happened at the time of the sale if only the policyholder was present.

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.

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.

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 Ombudsman. Not all Jersey-based companies are UK regulated, so ask the company or call the Ombudsman to check.

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.

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.

Only if the PPI was 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.

The company who sold you the insurance (this is often the bank or lender with loans and credit cards) 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.

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.

This only applies to some people – those identified as being 'systemically mis-sold' (ie, mis-sold as part of the sales process). Yet there are many other types of mis-selling. While some banks have started to do this, others don’t seem to be anywhere near ready. Don’t use this as a reason to wait - get your complaint started now.

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.

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.

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.

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.

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.

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 Going to the Ombudsman help. The majority 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!

The Ombudsman can decide whether your policy was sold unfairly (see examples). It can only do this after eight weeks from your first complaint letter to the bank (between Jun-Dec 2011, this period was 12 weeks) UNLESS the lender itself suggests you go to the Ombudsman before that.

Complaints are time-barred from going to the Financial Ombudsman Service if it's over six months since rejection. But don't let that put you off. Before May 2011, when the banks lost in court, many people were tactically rejected. Banks deliberately rejected cases knowing they'd win at the Ombudsman, but most would never take it further.

If that happened to you, you just need to start a fresh complaint at the bank. Then if it rejects you again, you can go to the Ombudsman. Do note it won't necessarily look at them all - it's said it'll do this on a case-by-case basis.

This is a bit of a nightmare for some. Using the Ombudsman's 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.

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.

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.

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 Ombudsman if you think you aren't being treated fairly. See the Setting Off guide for full info.

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. After this, if you don’t think it’s enough, you can still complain to the Ombudsman.

Probably not. One exception may be if you got the payment before May 2011 due to the new regulatory guidelines, but it isn't likely to be easy. Call your lender to check.

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.

We haven't heard of this happening, and neither has the Ombudsman - so ask for the full reason for the change, and complain to the Ombudsman if you aren’t happy.

Not on the refund, but you do need to 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

You only need to pay tax on this last element. Let's say your payout, 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, which would be taxed.

Of the major banks, only RBS and NatWest automatically deduct tax for their current customers. Barclays (including Barclaycard), Halifax, HSBC, Lloyds TSB and Santander don't, so organise a payment by contacting your tax office, or call the income tax helpline on 0845 300 0627.

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.

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 our 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 Ombudsman can answer questions on 08000 234 5679 (0300 1239 123 from a mobile).

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 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.

Additionally, the Competition Commission has investigated the market and made a number of demands on lenders. Some came into effect in October 2011, mainly the requirement for firms to give more information to the consumer, and some from April 2012, including the banning of sales within a week of selling a loan, and totally banning single premium polices.

What's happened with complaints?

In spring 2009, the Financial Ombudsman Service complained to the regulator that it thought lenders were "deliberately trying to obstruct the Ombudsman process" and that some lenders were rejecting ALL consumers' attempts to reclaim.

In September 2009, for the first time, it released details of company-by-company complaints data. Some big name lenders (Black Horse, Capital One, Egg, Lloyds TSB, Northern Rock, RBS, Barclays and MBNA) lost over 90% of insurance (primarily PPI) disputes at the Ombudsman.

Things have got a little better since. In the last six months of 2012 Black Horse, Bank of Scotland, Barclays and Lloyds have each had over 75% of cases dealt with by the Ombudsman decided in the consumer's favour, with the overall average slightly better at 60%.

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.

It's scary, but true - many still have loans from when the picture was like this:

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.