What Does PPI Stand For?
Payment Protection Insurance is, as the name suggests, an insurance policy protecting your repayments or your ability to repay any borrowings you might have with a bank or other financial institution. Simply put this type of policy ensures that your loan, overdraft or mortgage is paid in the case where you become ill or are unable to meet the repayments on your borrowings.
What Does PPI Cover?
PPI is designed to provide you with peace of mind if any of the following happen to you:
- You become unemployed
- You have an accident
- You become ill with a medical problem
If you were to find yourself in any of these situations PPI is designed to provide you with a monthly payment and/or cover a percentage of your loan, mortgage or overdraft payments each month also. Each PPI policy is slightly different in what it offers you but you can expect that you would receive assistance with the payments on your borrowings for a period of up to 2-years. It’s also important to note that certain conditions within your PPI policy may prevent you from receiving payments – if you quit your job instead of being made redundant for example.
When sold to customers properly PPI can be extremely beneficial to a person with borrowings of any kind from a bank because it gives them additional peace of mind when it comes to their repayments being taken care of if they are unable to make these repayments themselves for example.
What Is A PPI Claim?
In and around 2008 the sale of Payment Protection Insurance had reached its height and this is also when some people started asking questions about their PPI payments. In fact some people started to say that they’d never signed for PPI on their borrowings or that they were told that having PPI attached to their borrowings would improve their chances of an application for a loan or mortgage. In short Payment Protection Insurance had been massively mis sold by the leading banks in the United Kingdom.
As news of the PPI scandal spread people started contacting their banks to question their Payment Protection Insurance and to reclaim the money they’d spent on an insurance policy many of them had never asked for in the first place. The problem became so severe that many banks had to hire additional call centre staff to handle the flood of calls they received. In 2010 the problem for the banks in relation to the PPI mis selling scandal became worse when the entire PPI fiasco came to the attention of the Financial Services Authority who ruled in favour of the customers being refunded if it were proven that they had been mis sold Payment Protection Insurance for any reason.
So a PPI claim is where you, as the customer, can claim back some or all of the money that you spent on PPI payments for, possibly, the entire duration of your loan. To illustrate how important this is the average PPI claim comes to around £2,000 but can often be quite a bit more than that.
Can I Claim Back PPI?
In most cases the answer to this is “Yes” and the vast majority of people who were sold PPI can claim some or all of that money back. There are certain circumstances where your claim is going to be more successful and these are:
1. You were sold Payment Protection Insurance as a self-employed person – most PPI insurance policies do not cover self-employed people so you were making payments on a policy that didn’t apply to you at all.
2. You were sold Payment Protection Insurance as a student.
3. You are currently retired and you were sold Payment Protection Insurance.
4. You were granted borrowings and sold Payment Protection Insurance when you were unemployed.
5. Were you sold this type of insurance without all the benefits or conditions being explained to you fully?
6. Did a bank representative tell you that PPI was compulsory on your loan, overdraft or mortgage?
7. Did a bank representative imply or state that signing up for PPI would improve your chance of being granted a loan, overdraft or mortgage.
If you can answer ‘Yes’ to even one of these questions there is a very strong possibility that you can make a successful claim against your bank for the full amount of the payments you made on your PPI policy with them. In fact some people will have to make several claims because they have PPI on their loans, mortgages and their overdraft and these claims can amount to tens of thousands of pounds.
The average payout on a Payment Protection Insurance claim in the United Kingdom is approximately £2,000 but some people have received claims of up to £30,000 but these are usually exceptional circumstances.
How To Claim PPI Back Yourself
While you do have the option of using a third party to claim back your PPI premiums for whatever bank or financial institution charged you for them in the first place you can, and probably should, try to reclaim the premiums yourself first, so if you’re wondering “Can I claim back PPI?” the answer is usually ‘Yes’ you can.
1. You’ll need to find the paperwork or forms in relation to the borrowing you’re claiming your PPI back from. You should have been sent a copy of these forms and have them on file somewhere in your home.
2. If, for whatever reason, you don’t have this paperwork to hand then you can file a DSAR (Data Subject Access Request) with your bank to get a copy of this paperwork from them. You’ll usually have to pay a fee of around £10 for this.
3. Check that the dates of the loan or finance you received was within the last 6-years or are still active today.
4. Contact your bank and ask to speak to the department that deals with Payment Protection Insurance claims – they’ll have one.
If your bank rejects your PPI claim then don’t take this as their final answer and submit your claim again. If the bank continues to reject your claim then you can contact the Financial Ombudsman Service to check if your case is valid.
Payment Protection Insurance Claims Deadline
The only real deadline that comes into play with PPI claims is that the loan, mortgage or overdraft you’re claiming your PPI back from must have been within the last 6-years and ideally this loan will still be active.
Payment Protection Insurance In Summary
The theory behind Payment Protection Insurance is solid and when sold properly and to the right customers it protects both the interests of the bank and the interests of the customers also.
The problem was that sales teams in banks were put under pressure to meet sales targets and then greed stepped in and took over. The net cost to banks in the UK for mis selling these policies looks to be in the region of £2,000,000,000 (2 billion pounds Sterling) so it appears crime, in this case, simply didn’t pay.
