What is Payment Protection Insurance?
Payment Protection Insurance (PPI)
The chances are that you've heard of payment protection insurance, or PPI, as a financial product that has been notoriously mis-sold to many customers taking out loans or credit cards over the last few years.
We'll explain exactly what PPI is, and help you work out if you need it and if you've been mis-sold it in the past over the course of this guide.
What is PPI?
Payment protection insurance is a form of cover sold alongside various types of loan or credit card. The idea is that it allows you to guarantee you'll be able to keep up with repayments in the event that you are unable to come up with the money yourself for whatever reason.
This could be due to illness, redundancy or any other change in your employment status.
Do I need PPI?
At least in theory, PPI can be very helpful and is similar to other loan insurance products like income protection insurance or critical illness cover.
Whether or not you feel that you need it is, ultimately, up to you and will depend on various factors including the cost of the cover as well as any contingency measures you might already have in place in case you can't make payments like a savings account or the income of a spouse.
Have I been sold PPI?
Until fairly recently, PPI was often bundled in with various loans and credit cards by providers, often without the full knowledge of the borrower.
If, when you took out your credit card, there was discussion of 'protection cover' or simply 'cover', then the chances are that you were sold PPI along with the card.
The best way to check if you have been sold PPI is to simply examine the original paperwork associated with your credit card. If you don't have it to hand then you can always contact your card provider to get hold of it and all of the associated information. Again, check for phrases like 'protection cover' on your paperwork, including any monthly statements.
Have I been mis-sold PPI?
What the PPI scandal in recent years revealed was that many loan and credit card providers had lumped PPI in with their credit products either without the borrower being fully aware or to borrowers who would be unable to claim anyway.
Those who have pre-existing medical conditions, as well as some self-employed people will not be able to claim on their PPI even if they have a policy active. This was not always made clear to those who it was sold to.
If you fall into any of these categories, or feel that you have been sold PPI when didn't want or need it, then you should be able to reclaim it.
How to Reclaim PPI
In order to reclaim PPI you feel that you've been mis-sold, you'll need to get in touch with the company who sold it to you.
You'll need to get all of the relevant documentation ready and draft a letter detailing the amount you've paid, when the policy was taken out, and how much you paid for the cover, among other bits of information.
You'll also need to provide any relevant reference numbers for your complaints case and the details of any personnel involved to make the process as streamlined as possible.
There are various templates for PPI complaint letters available online that will tell you exactly what you need to write in order to reclaim.
In some cases, when the body who sold you the PPI does not respond, you will need to go over their heads and get in touch with the Financial Ombudsman Service (FOS). The FOS is a government watchdog designed specifically to promote fair and reasonable practise in these kinds of situations so they will be able to help you reclaim what you are owed.