For advice on how you can claim, visit our partners Immediate Financial
Payment protection insurance has been mis-sold to millions of people across the country for the best part of the last decade. The controversial insurance was sold a number of ways, often attached to other personal finance products such as credit cards, personal loans or car finance.
Who was involved?
Lloyds Banking Group is one of the worst offenders for mis-selling the insurance and they have seen customer complaints sky-rocket as a result. In the last year alone general insurance and PPI complaints have risen by 130%.
PPI complaints reached a staggering 562,731 over the same period for the Lloyds Banking Group. This was double all other complains the bank received.
PPI complaints made up 38% of all Lloyds TSB complaints in 2011 and the bank has set aside £3.2 billion to deal with the flurry of claims and compensation they will have to pay out.
What has been awarded?
Banks and lenders have already paid out an eye-watering £1.9 billion in the last year. However, a number of industry experts believe this could soon reach £8 billion as the sheer volume of complaints continues to grow.
Recently banks were forced to write to consumers telling them that they should check to see if they have been mis-sold PPI, as they could be able to claim back compensation.
Santander has already forked out £538 million in compensation and as a result they have seen profits fall by 40%. Barclays is another name in a long line of leading high street banks, which have mis-sold PPI. They have set aside £1 billion to cover mis-sold PPI claims.
Making a claim
If you believe that you have been mis-sold payment protection insurance then you could be able to win back money that is rightfully yours.
To make a claim you first need to establish if you have been mis-sold the insurance. If you were a student, a pensioner or self-employed at the time when you may have taken out a policy, it could have been invalid and so would have been mis-sold.
PPI is typically designed to safeguard your finances in case of redundancy, accident or sickness, which prevent you from earning.
In order to qualify for the insurance, in most cases, you must be aged between 18 and 65 and working full time or at least 16 hours a week.
The policy may not have been fully explained to you, or been told that it was compulsory. This is another way which banks and lenders have mis-sold the product.
You can make a complaint independently to the Financial Ombudsman Service (FOS) who will check to see if you are able to make a claim. Alternatively, you could take your complaint to a third party, however, they might take a chunk of the compensation should you win. The Financial Services Compensation Scheme (FSCS) believes that consumers will lose over £12 million by making claims to management companies.
FSCS research found that more than three-quarters of people use claims management companies.
Mark Neale, Chief Executive of the FSCS, said: “The significant uplift in PPI claims shows no sign of slowing down. The amount consumers pay to claims management companies for handling their case is sizeable.î
“Claims management companies take a significant part of the possible pay-out and are no more likely to make a successful claim than consumers can on their own. People can save thousands by submitting their claims directly to the FSCS, rather than through a third party.î
Alternatively, you could make PPI claim with Money Expert.
When will you get compensation?
Banks may have written to up to 12 million customers urging them to now make claims about mis-sold PPI but it will take a substantial length of time to see any of the compensation.
The Finical Services Authority (FSA) has given lenders guidance on the steps they should take when writing to customers and a timescale of eight weeks for banks to respond to claims, there is as such, no time limit on when they have to pay the cash.
The FSA states that banks and credit card companies have to write ëclearí and ëjargon-freeí letters to customers.
Consumer watchdog Which? is calling for a set of strong communication guidelines between banks and customers over PPI issues.
Speaking about the FSA guidelines, Which? executive director, Richard Lloyd, said: “We’ve seen some really poor examples of communication from banks to their customers. There is no excuse for banks making the PPI mess even worse through unclear and confusing contact with customers entitled to compensation.î
“Paying back mis-sold PPI promptly must be a priority for lenders that made billions from this deeply flawed product. It’s essential that the regulator’s new guidelines require all financial providers to be clear with people about their rights to a claim, the process and the timeframes for lodging a complaint.
The FOS has found that 99% of claims are in the consumers favour and over the next two years expects to receive a record 165,000 PPI complaints.
For advice on how you can claim, visit our partners Immediate Financial.