A Guide to Using a PPI Reclaims Company

A Guide to Using a PPI Reclaims Company

A Guide to Using a PPI Reclaims Company

Payment Protection Insurance (PPI) policies were intended to cover the cost of loan repayments in the event of unseen circumstances (sickness or unemployment for example). They were usually products sold alongside personal loans, mortgages or credit cards and were designed to provide 'piece of mind' that the policy holder could meet his or her financial commitments in the event of illness or redundancy.

The issue with Payment Protection Insurance is that it was often sold to individuals who had no real need for the insurance and sometimes sold to people who would not even be able to claim on the policy (for example, self-employed people, retired people or the unemployed would not be able to claim). Many policies also failed to cover for key reasons for sickness, like back problems or work related stress. The costs of PPI policies were also sometimes significant, with monthly payments reaching hundreds of pounds.

The idea of payment protection insurance is not a bad one, the problem is how it has been sold - or missold - by many of the banks. Some major banks have already been fined substantial sums for misselling PPI policies. It's true to say that the misselling of PPI products has landed many banks in a lot of trouble. It is estimated that in excess of 10 Billion worth of PPI policies have been sold and as many as 30 million policy holders might have a claim for compensation.

Statistics have suggested that as many as 8 out of 10 of these policies may have been sold incorrectly. Sometimes customers are unaware that they actually have the insurance, not noticing that they have been sold a 'fully protected' i.e. insured loan or mortgage. Common reasons why PPI policies could be considered as being missold to customers are as follows:

- The customer was told that they had to take out PPI in order to get the loan or mortgage

- The customer was pressure sold the PPI

- The customer was not informed PPI was also available from an independent insurance provider

- The customer was not told about any exclusions, such as the ones mentioned above

- The customer was not asked whether they already had insurance which would already cover the loan or mortgage

Many PPI holders who think they may have been missold the product are understandably interested in finding out if they have a valid claim for compensation. There are thousands of reports of cases where customers have successfully claimed significant sums of compensation in a relatively short space of time (sometimes a matter of 6-8 weeks).

The usual process for this involves enlisting a refund company. Once it is established that there is a case for compensation, a legal team working on behalf of the customer will try to reclaim the capital spent on the PPI, interest and any 'secret commissions' received by the seller of the PPI. Success rates tend to be very high, as are the potential sums of money which can be reclaimed from missold Payment Protection Insurance policies.

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