Can I claim for mis-sold Payment Protection Insurance?

11-May-2009

Payment Protection insurance is taken out to cover your bill payments in the case of unexpected loss of employment due to accident, sickness or redundancy.  This can be taken out alongside a loan, mortgage, credit card or store card, and is also commonly known as ASU or 'Accident, Sickness and Unemployment' cover.

Millions of people in the UK have taken out this product, and it is sold every day.  However, there are various reasons why the policy that you have taken out was not sold to you correctly.  In this case, you could be eligible to reclaim your premium.

You may be able to claim back money for your PPI policy if:

* You were sold the policy when you had no chance of being able to make a claim.  If you were unemployed, self-employed or retired at the time of taking out the policy, you would never have been able to make a valid insurance claim.  Whoever sold you the policy should have checked this with you.

* If you were older than the upper age limit on your policy when you took out the policy.

* If you have a policy that you do not remember taking out.  It may be that there was an opt-out box that was too small to be immediately visible, in which case the insurance was sold unfairly and against Financial Services Authority regulations.

* Likewise, if you were suffering from GP-diagnosed stress, back problems or another pre-existing medical condition at the time of taking out the policy, you would not be able to make a claim should you be off work for this reason. Again, it is the responsibility of the salesperson or broker to check this with you.

* You were sold the policy at the same time as your loan or store card (at "Point of Sale"), and were led to think that taking out this insurance was compulsory for the loan/card to be accepted. It is not compulsory, and nor do you need to buy it from the loan/card provider.

* You were sold a "single premium" policy alongside a loan, where you were required to pay a lump sum covering the cost of the insurance, adding to the amount borrowed.  If you took this policy, you would be paying interest on both the premium and the loan.

How do I claim for a mis-sold PPI policy?

PPI sales have only been regulated by the Financial Services Authority since January 2005, so if you took out a policy before that, it will not have been covered by the latest rules. However, if you took out a policy earlier than this and feel that one of the above conditions applies to you, it might still be worth raising this with the Financial Ombudsman Service, an independent, free service set up to mediate in disputes between consumers and financial institutions.  Call them on 020 7964 0500, from Monday to Friday between normal office hours.

If you have taken out your policy since  the start of January 2005, and feel that one or more of these issues applies to your case, you could be eligible to claim back money that you spent on your policy. You first need to check the terms and conditions of your policy. Then, you need to write a letter (keeping a copy for your records) to the company that sold you the PPI, explaining the situation and asking for a refund.    At this point, you may be referred to the actual provider of the policy (the insurer) in which case you should re-send the letter to the insurer, asking for a refund from them. If you hear nothing back or are refused, write again, threatening to complain formally to the Financial Ombudsman.  If this is unsuccessful, collate all the letters and correspondence you have had with the insurance provider and then contact the Financial Ombudsman on 0207 964 0500, asking it to take on your case.

New FSA controls on Payment Protection Insurance

Policies taken up at "Point of Sale" are considered irresponsible and it is now being recommended that lenders allow the person a waiting period, and also that it is made extremely clear that the insurance is not compulsory in order to be approved for a card or loan.The Financial Services Authority (FSA), the governing body for financial services, has cracked down on the sale of "single premium policies" and totally banned lenders from selling this type of policy from 29 May 2009 onwards.  If sold correctly, Payment Protection Insurance is a viable and useful product, so don't be completely put off this type of insurance.

In these difficult economic times, cover that aims to protect you should you lose your income unexpectedly can make a bad situation much better for you and your family.  However, you should not feel pressured into taking out the insurance at the same time as a loan, credit or store card, and do shop around for the best deal.  Carefully check all the elements of the policy before signing, paying particular attention to the exclusions and whether they apply to you.