Make good on mis-selling mistakes
Payouts to wronged consumers have now topped £1 billion and last year (2010/2011) the Financial Ombudsman received an average of 2,000 complaints a week i
It all started in 2006, when the financial services regulator, the FSA, began fining some payment protection insurance providers for pressuring customers to take out policies they didn’t want, understand or need. By 2010, the FSA demanded consumers be compensated and, when a High Court ruling last year came down in favour of consumers, people began lining up to claim their PPI refund.
Not everyone who has a PPI policy will be entitled to compensation, but it’s worth checking with a specialist advice agency like PPI Claimline because the practice of mis-selling was widespread. It’s estimated that 90 per cent of policies were mis-sold ii
So what counts as mis-selling?
You may have been wrongly told that insuring your loan repayments was mandatory. So, if you didn’t take out the insurance, you wouldn’t get the loan.
Some salespeople implied that taking out the cover would increase your chances of getting credit. But that’s not true. Approval for loans, mortgages or credit cards is based on your circumstances and credit rating – not whether or not you have PPI.
Perhaps you felt pressured into taking out the policy. Some salespeople were heavily incentivised to sell policies and they went to great lengths to ensure they reached their targets. If you think you were intimidated into signing up for PPI, you could be entitled to claim compensation.
Some PPI policies did not cover the whole term of the loan. Single premium policies typically last for five years and are expensive. So, if your loan repayments were over more than five years, you weren’t covered. If your sales advisor didn’t properly explain this to you, it could be described as mis-selling.
You may have signed up to PPI even though your circumstances made you ineligible. People who had no income to protect – the unemployed, retired or full time students – were sold potentially worthless cover. Similarly, if you had a pre-existing medical condition or worked in the armed forces, you would not have qualified for PPI.
If your sales advisor did not take the trouble to fully outline the costs, terms and conditions of PPI, it is likely the policy was mis-sold to you because you were not in a position to make a fully informed decision about buying it.
Many people take out loans through the internet and if you did this, a PPI compensation claim may not be as straightforward. That’s because it’s your responsibility to read the terms and conditions of the insurance as it’s offered to you.
But, you could still be entitled to compensation if your provider used pre-ticked boxes requiring you to opt out of the insurance rather than actively decide to buy it. This practice stopped in 2007, but if your agreement is older, you should check your paperwork. You could be paying for PPI without even knowing it.