subject: Consumers Warned To Expect A Ppi Refund Letter From The Bank [print this page] The Financial Service Authority (FSA) has said that over the next year, banks will send out letters to between four and 12 million customers who may have been mis-sold PPI insurance policies on loans and credit cards, to enable them to reclaim PPI.
The FSA regulates the financial sector and FSA managing director Martin Wheatley has said that the move could cost banks much more than the 1.9 billion paid out to consumers in PPI compensation last year.
Many consumers still do not know that they are able to reclaim PPI on loans, credit cards and mortgages they took out.
PPI (payment protection insurance) was introduced to help people pay their bills if they became unwell, injured or lost their jobs. However, over time PPI added hundreds - and in many cases thousands - of pounds to the cost of a loan or mortgage or credit repayments and many companies now help consumers mis-sold PPI to win PPI compensation.
In many cases customers found that when they tried to make a claim on their PPI policies, the policy was not suitable because they were self-employed, making it completely unsuitable for them.
Some people who were retired were sold PPI which covered them for loss of employment, making the PPI policy pointless.
Other consumers were forced to take out a PPI policy in order to obtain a loan - or were not advised that they could shop around for PPI, rather than accept the policy offered with the loan, which might have been more expensive.
Some consumers who have received a PPI refund on mortgages or loans have found that, even when the mortgage or loan was paid off, PPI payments continued to be taken from their accounts.
One case recently highlighted in The Guardian involved a customer who had almost bought one property - but changed their mind and bought a different one instead.
When they retired, they noticed a direct debit to Legal & General on their statement, which they could not allocate.
The monthly payment turned out to be a PPI premium which they had been paying for eight years for accident and sickness cover for a mortgage with Northern Rock they never actually took out - but which had been set up for the property they nearly bought, rather than the one they had been living in for eight years.
The story is a warning not only to check bank statements - but also to make sure that any direct debits or policies are cancelled if plans are altered contracts are intended to be binding and it can be a fight to reclaim PPI in some cases.
Legal & General had underwritten the policy for Northern Rock - Northern Rock Asset Management (NRAM) said that there was no automatic cancellation procedure in place for the mortgage protection payment insurance (MPPI) when the mortgage application it related to was not finalised.
In this instance, NRAM denied liability, but agreed to cancel the MPPI and refund the eight years of premiums which had been paid - plus 8% in interest, totalling 2,360.02.
The customer had been going through a divorce and moving house at the time and had forgotten to check all the details - but because of cover from their employment, they might not have required the Legal & General MPPI cover anyway, it transpired.
In these cases, reclaiming PPI can be a complex issue, so always use a reputable firm to help you get your PPI refund, as experts will be able to cut through any confusion or complicated issues much more quickly.
