How Does PPI Work?
If you’ve got or had a loan in the last six years, you may be able to reclaim £1,000s in mis sold PPI.
The misselling of expensive Payment Protection Insurance (PPI) alongside these products has been rife. Lenders like A&L and HFC Bank have had huge fines. Here is a step-by-step guide, including free templates, to reclaiming loan insurance.
How Does PPI Work?
PPI is better known as payment protection insurance. It is a form of insurance that was designed to cover the payments when you begin to repay your loan. This happens if you were in an accident, sick, or lack of employment. The insurance is paid for about a year after the accident. The problem with this insurance is that it is sold under false pretenses to a lot of people who get a loan. Which means that a lot of people waste their money by buying for the insurance. But there is a way to get the money back if this has happened to you.
How Much Is Typical PPI Loan Insurance Payment?
Usually a person will pay up to 15% of their balance for PPI insurance but some companies can charge up to 30%. This may be a small amount but it can add up fairly quick. This way of selling the insurance with the loans is the best way for lenders to make any profit from a loan. Currently, there are about 20 million people in the United Kingdom that have PPI. The biggest cost of the insurance comes from the interest rates. There are several people who believe that loans are one of the most overpriced items in the world.
Why is PPI Mis-sold So Often?
The best way for lenders to sell PPI to the people who are taking out loans is to dress the sales people up as ‘advisers’. This is because they are more likely to push PPI on people who don’t really need it. Lenders put too much pressure on people to take out PPI Insurance and this is why…….
For every £100 insurers take on car insurance, they pay £78, on loan PPI they pay out just £15, meaning PPI is HUGELY profitable.
How May PPI Have Been Mis-sold?
There are two ways that you might be able to get your PPI back The first way is if you bought the insurance online. They are the uses that are the hardest money to reclaim. The best way to get your money back from an online company is checking to see if the company used pre-ticked boxes. Nowadays, many apply for loans online. If you signed up on the internet, reclaiming’s more difficult as the full terms are usually available there, and the onus was on you to have understood them.
But there’s an important exception. If you signed up with a provider that was using pre-ticked boxes, you may have 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 a loan before this date, check urgently – you may have bought insurance without knowing. Most lenders do not do this anymore but make sure that you did not buy the insurance without knowing that you did.
The second way is if you bought the insurance over the phone or in person. In this case, the provider is suppose to make sure that everyone understands all of the terms of the policy. Usually the sellers will tell you that the insurance is a requirement by law, but this is not true. If you were told this, it is considered to be mis-sold. If this has happened to you, you can write and complain but you will probably be rejected. You will have to write at least three letters before you get their attention.
Step-by-step PPI reclaiming
There are several steps in reclaiming your money.
The first step is to check your policy. You will need to check for the following information: if you started the policy within the last six years, if it is an older but active policy, and if the policy ended more than six years ago. Make sure that you have all of the right paperwork. You will need your policy agreement so if you cannot find your agreement, just call your lender and ask for a copy. Some lenders will ask for money to give you a copy usually £10.00
The second step is to go through the insurance checklist.
The first thing on the checklist is if you were told that the insurance was required by law. The sellers may also tell you that the loan will cost more if you don’t get the insurance, the insurance will help you qualify for a certain product, or that they cannot finish your application without the insurance. This is all false information from the lender.
The third step is to write to your lender.
You just contact the company that sold you to insurance and explain the details so you can get a refund. Also you should check to see if the company was regulated by the FSA at the time of the sale. If you find out that they were not registered then you will probably have to fill out a questionnaire. This questionnaire is very easy to fill out. You do not have to give out your whole life story.
The last step is to write to the Ombudsman.
The Ombudsman is the service that is put into place to take care of complaints between a company and the customer. It does not cost you any money to use this service. They are the company that can officially decide whether or not the policy has sold to you unfairly. It is usually not a quick process, but you will probably get the most money through using this service. It could take up to a year to get your money.
How To Make a Complaint
The best way to make a complaint with the ombudsman is fill out your information on the website or call them to tell them all of your information. They will look at each side of the complaint very carefully. Then they will let you know whether or not they will take your case.
If You Think The Ombudsman Wrongly Turned You Down
If you think that your assigned case worker wrongly turned your request down for a refund, then you can ask for one of the 41 actual Ombudsmen to look at your case. This will cause a very detailed investigation so it could take several months before you hear from them. Plus you can still take the company to court yourself if you feel that you need to. Everyone deserves the right to get the money back if they were wrongly charged for something.
Sometimes this will take a long time, usually around six months but maybe even up to a year or more as the Ombudsman is dealing with huge numbers of PPI complaints, but don’t worry – you can then leave the matter to the Ombudsman to resolve and it will contact you with any offers from your PPI lender.