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Have you been Mis-Sold PPI ?missold ppi

Have you got PPI on your Loan or Credit Card ?

If you have taken out a loan, chances are that in incorporates Payment Protection Insurance (PPI).

This might be because it was sold to you as an appealing add-on that would give you peace of mind. Alternatively, it might have just be included as part of the loan. Worse still, the lender may have said that you could only get the loan if you took out the PPI with it (“it enhances your credit rating” etc). In other words it was compulsory and was Mis-Sold PPI.

The truth about PPI

The truth is that the vast majority of PPI policies are:

  • Fairly short term – usually no more than 5 years cover is given, even if the loan you are taking out is for longer than this.
  • Very expensive (can add another 30% – 40% onto the cost of your borrowing)
  • Offer cover you don’t need, as you may have it elsewhere (through other loans, or through your contract of employment)
  • Offer very limited benefits – quite often the value of the insurance premiums you pay out in total are similar to the maximum benefits you could receive if you made a claim.

In addition:

  • There are many exclusion clauses which means that many PPI claims are rejected
  • Previous medical conditions are excluded
  • Related medical conditions are excluded (so, for example, if you suffered from high blood pressure and subsequently had to take time off following a heart attack, the policy would probably not cover you)
  • Back conditions and Mental health conditions are usually excluded (so, if for example, you took anti-depressants following a close family bereavement, any related time off wouldn’t be covered by most PPI policies).

Did you know…?

The vast majority of PPI policies are known as “loan funded single premium”policies. This means the premium is added to your loan and paid off over the life of the loan. In other words, you are paying high interest on the insurance premium for many years.

You could also be paying for cover you are no longer getting. Most PPI policies are limited to a maximum term of 5 years. If the premium has been added to your loan (say a 25 year mortgage), you will be paying the premium off over 25 years, with interest, even though the PPI cover will have ended after 5 years.

Because this is so unfair to borrowers, The Financial Services Authority (FSA) asked lenders to stop selling loan funded single premium PPI policies from 29th May 2009, with a compulsory ban coming into force on 1st October 2010.

When a Cashback is not a cashback ?

When claiming back Mis-Sold PPI some lenders offer a cashback. However, this is usually based on having to make a cashback claim on a specific date. If you miss the date, you lose your entitlement to the cashback.

One of the key terms is that you can’t make a claim on the PPI policy. The real catch is whilst the premium may be returned to you through the cashback scheme, the interest payments still have to be paid, which are substantial. So, for example, a single PPI premium of £1,000 may end up costing £2,500 over 10 years. Even after a cashback of £1,000, you will have ended up paying £1,500 for the privilege of not making a claim !

Surely the banks, building societies and other lenders wouldn’t rip me off ?

So far, the Financial Services Authority (FSA) have fined some 20 lenders over £12 ½ million for the way they have sold PPI and handled the subsequent complaints. This included a fine of £7m against Alliance & Leicester. Other major lenders, such as Egg and GE Capital have also been fined.

The Citizens Advice Bureaux (CAB) and Which? described PPI sales a widespread racket and the Competition also issued a scathing report on PPI.

How many consumers may be effected ?

A statement issued by the FSA in August 2010 suggested that over the next 5 years, there would be over 250,000 claims made each year, totalling £2.7 billion.

What do I do if I have been Mis-Sold PPI?

If you have (or had) a PPI policy attached to your loan (or on your credit card) which you didn’t want or weren’t aware of how much it cost or it just didn’t cover you when you needed to claim, it was probably mis-sold PPI. If this is the case, you are entitled to have the PPI loan cancelled and the premiums repaid to you with interest. Your loan would then need restructuring to reflect the reduction in the loan and the resultant lower monthly payments.

How do I claim ?

You can claim the mis-sold PPI directly to your lender. You have to be prepared to argue your case. Even then you are likely to have your case rejected. The FSA and the Financial Ombudsman Service have found that the vast majority of these rejected complaints were actually valid complaints. If you are successful, you will need to calculate what redress you are entitled to. This is complex. You could always leave to the lender to calculate it, and hope that they don’t rip you off gain. Frequently, they make derisory goodwill gestures or reduced offers.

Why use Ultimate Law ?

Ultimate Law specialises in this area of law (Mis-Sold PPI) and regularly litigates against the UK’s main lenders winning full redress for its clients. Most importantly, if litigation is involved, you retain 100% of the redress. There is no deduction made.

CALL NOW FOR A CHAT WITH A MEMBER OF OUR TEAM 0161 710 2030

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