The regulator is cutting off PPI reclaims - if you HAVE or EVER HAD a loan, credit or store card, mortgage, overdraft or catalogue debt, take note. Even if you've been rejected from a past PPI reclaim...
1. Now just having had PPI means most were mis-sold.
2. Deadline's 2019, but act ASAP to beat the queue.
3. Don't assume 'it's not me' - even if you said no to it.
4. Don't pay to reclaim. Our free tool does it for you.
5. A typical payout is £3,000 - so it's worth your time.
The UK’s biggest financial scam wasn’t by dodgy blokes in back alleys, but bankers in pinstripes. Last week the regulator, the Financial Conduct Authority, gave in to banks' demands to protect their balance sheets, and said no more new PPI reclaims will be allowed after 29 August 2019.
Over £20 billion has already been repaid, but it's just a fraction of what may be owed. So even though the deadline's a way off, don’t dawdle. From August the regulator will spend millions marketing the cut-off, likely clogging up the system, so do it now to get to the front of the queue.
I started warning against PPI in 2000, and in 2007 wrote MSE's PPI reclaiming guide, long before the regulator really took up the cudgels. So far 6.5m+ free MSE template letters have been downloaded - it's estimated these have got people up to £5bn back - and recently we made it even easier with our free PPI reclaim tool. Let me take you through it (and do have a listen to my BBC5live PPI in short).
- What is PPI mis-selling? PPI (Payment Protection Insurance) was an insurance policy sold alongside loans, cards, overdrafts, mortgages and catalogue debts. It was designed to cover repayments for a year if you couldn’t - in itself, there was nothing wrong with the policy.
Yet banks and building societies massively overcharged and systemically mis-sold it, lying that it was compulsory, adding it without asking & failing to ensure it was suitable (see the mis-selling checklist).
- New. Now just having PPI means you were likely mis-sold. Within the deadline announcement, a new mis-selling category called 'Plevin' (after a court case) was confirmed. It comes into effect on 29 August this year.
The Plevin rules mean if over 50% of your PPI’s cost went as commission to the lender, and that wasn’t explained to you, you are due back the extra above that. For this to count, your PPI has to have still been active at some point since 2008.
Staggeringly, with loan PPI, on average 67% of what you paid was pocketed by banks as commission from insurers, and banks almost never mentioned it - so millions more people are owed possibly billions more pounds.
On a £10,000 loan over five years, your 'Plevin' compensation would typically be £500 (if you're due all the PPI back for other mis-selling, you don't get both).
Lenders will be forced to write about Plevin to 1.2m people who've had past reclaims rejected. Yet if you've never complained, but are owed, bizarrely you won't be told and you need to take it up. See full Plevin reclaim help
- I'm sure I didn't have PPI. Do I really need to check? YES. One way it was mis-sold was adding it without telling you or even after you said no. So if you've had a debt product of any type, check.
As KH emailed: "We believed we'd never had PPI and ignored all your suggestions to check - until we saw you say that even if we didn't think we had, check. Turns out we had three policies over the past 20 years and have recently had almost £5,000 back. Thank you, thank you."
The key steps to reclaiming PPI
Here's a summary - for full help & free tool, see our PPI reclaim guide.
1. Have you got the paperwork? There’s no time limit on PPI reclaiming - you can go back as long as you like, as long as you’ve evidence. As Daz tweeted me: "@MartinSLewis received PPI refund of £2,500 on a loan I had forgot about from about 20 years ago."
So check all old loans, credit cards, mortgages, store cards and overdrafts to see if there was PPI. It will have been called something like "payment insurance" or "accident or sickness cover".
- Can't remember who your lender was? All debts active in the last 6yrs are on your credit report(s). Get your Experian report (from the UK's largest credit reference agency) for free via the MSE Credit Club, plus see how to check other reports.
- Don’t have the paperwork? Request it from your lender going back 6yrs.
- No paperwork for very old loans? Ask your lender, but be prepared you may've missed the boat.
2. Were you mis-sold? Typical examples include if they lied that PPI was compulsory or that it'd cut your loan costs - sometimes it was added without asking, or even after you'd said no. They had a duty to ensure it was suitable for you - it may not have been if, for example, you were self-employed but got unemployment cover. Run through our full mis-selling checklist.
3. Do it yourself for FREE. I'm going to holler this from the rooftops till I'm blue in the face. You do NOT need to pay to reclaim. Claims handlers do very little you can't do yourself, and they take a whopping 25% fee plus VAT - often £1,000s. To do it easily, use our free reclaiming tool.
4. If rejected, go to the free Financial Ombudsman. Sometimes banks & building societies say 'fair cop' & pay out £1,000s in just a few days.
If not, you have six months to take your case to the Financial Ombudsman Service, an independent body which can adjudicate and force banks to pay you back. In 2016, in over half of all cases where banks rejected a reclaim the Ombudsman overturned it and ordered them to pay out.
To make it easier, our free reclaim tool above does this for you. If you’re struggling or unsure, call the Ombudsman helpline - 0300 123 9123.
Frequently asked questions (and answers, obviously)
Q. Hurrah, will this see the END OF SPAM calls & texts? This was the biggest response I got when I first tweeted about the deadline. My suspicion is it'll boost spam and ads, as they take their last bite. See how to stop spam calls & texts.
For me, celebrating the deadline is wrong. The cut-off puts the financial industry's interests ahead of consumers'. With the Ombudsman overturning half of bank rejections, until we can trust banks to deal with complaints fairly in the first instance, the regulator shouldn’t protect them.
Let's not bite off our nose to spite our face. We need harder rules to punish parasitical spammers, rather than killing people’s chance at recompense if they were screwed by the banks.
Q. I complained before but got nowhere. Should I even bother again? If your complaint was rejected in the last six months, carry on to the Ombudsman. If not, you may be able to restart your claim, but you'll need grounds (Plevin will help). If unsure, it's worth calling the Ombudsman helpline (0300 123 9123) to discuss this.
Q. Can I get a deceased relative's PPI money back? Yes. Any money owed becomes part of their estate, so the person who inherits can reclaim (let the executor know).
Q. Does the deadline apply to vulnerable customers too? Yes, and that's a worry. We must ensure it isn’t just those 'who can' who get their money back. Some who are due PPI reclaims have mental capacity problems, mental illness, literacy issues and more. I pushed hard on this when MSE had pre-meetings with the FCA about the deadline.
Thankfully it has factored it in to an extent. If consumers contact the FCA helpline (which starts in August 2017) and its staff feel they need face-to-face support, it will do that. Yet sadly the deadline still applies, so it relies on people to get in touch with the FCA. Charities and others will be forced to pick up the slack.