A high court ruling on payment protection insurance has opened the way for an estimated consumer payout of �4.5bn
Reclaim your PPI: template letter
Banks are to reopen thousands of claims relating to the mis-selling of payment protection insurance (PPI) and are likely to have to pay billions in compensation after a high court ruling this week.
Financial groups will now have to look back at past sales of the insurance, even in cases where people have not complained. But you don't have to wait for them to get in touch. If you have recently had your complaint rejected by your bank, loan provider or credit card company, or you think you may have been a victim of mis-selling and haven't done anything about it, now is the time to act.
PPI is typically taken out to cover debt repayments if people are unable to work owing to illness, injury or redundancy. It is often sold alongside a loan or credit card, and is also offered by some retailers. But many customers have discovered that they would never have qualified for a payout because of exclusions in the small print, while others have bought the insurance without realising it.
? What does the ruling mean? It opens the way for an estimated three million people to receive up to �4.5bn in compensation. Most of this is likely to be paid out as a result of companies reviewing previous PPI sales and pro-actively contacting customers to offer them redress (typically a refund of premiums paid plus interest).
? Will the banks start paying out straight away? The financial industry ombudsman said that the "clear-cut judgment" means companies should now be in a position to deal promptly and fairly with complaints. But the British Bankers' Association has 21 days to lodge an appeal, and says that some PPI claims "will continue to be placed on hold until the next steps have been decided".
? What should I do if I think I was mis-sold a PPI policy? Complain first to the bank or loan provider involved. Guardian Money has produced a template letter (see left). If the complaint is not dealt with to your satisfaction within eight weeks, you are entitled to take your case to the Financial Ombudsman Service.
But remember that banks will also have to review their past PPI sales and contact customers if necessary.
? Am I entitled to put in a claim? If you still have a policy running, or were sold any PPI within the past six years and it has expired, you may have a valid claim. Further back than six years, you will need copies of the paperwork.
? Will I be successful? The Financial Services Authority says that, on average, banks have rejected six in 10 of the complaints made to them, with some rejecting "almost all". About 30% of rejected complaints then go on to the ombudsman service, which has upheld three out of four cases (74%) in favour of consumers. The ombudsman has revealed that the "uphold rates" (the proportion of complaints where it finds in favour of the customer) are in some cases running higher still. At Lloyds TSB, the Co-operative Bank, MBNA and Tesco Personal Finance, the uphold rates were last year running at well over 80%. You should always take your complaint to the ombudsman if it is rejected by the policy provider.
? What sort of cases are getting payouts? A successful claim may depend on how the PPI was sold. Many purchasers have no idea why they were offered the plan. Or the seller may have told you there was no option if you wanted a loan. You have excellent grounds for a refund if you can show you could never have claimed on the policy. The most frequent exclusion is "self-employment". Those with short-term contracts, or casual agency work, will usually not be able to claim.
? I had my complaint turned down by the bank and I never pursued it. Can I now go to the ombudsman? Providers are supposed to issue a "final response" letter, saying that if you remain dissatisfied, you have six months to take your complaint to the ombudsman. If you received such a letter, and if more than six months have passed and you have not acted, you may well have missed the boat. But if you didn't receive a final response letter, or it didn't mention the six months' deadline, you should still have a claim.
Source: http://www.guardian.co.uk/money/2011/apr/23/ppi-compensation-claim
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The most frequent exclusion is "self-employment". Those with short-term contracts, PPI Claims Management
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