How to claim your PPI compensation
As the FSA outlines steps financial companies should take when contacting customers who've been mis-sold PPI, we look at how to get your money back.
The Financial Services Authority (FSA) has just published a set of guidelines for companies writing to customers who may have been mis-sold payment protection insurance (PPI). The FSA wants these letters to not contain financial jargon, outline the specific reasons why the customer may have been mis-sold to and highlight that there's a time limit for claiming any compensation.
Why is the FSA doing this? Because there are still millions of people who may be entitled to compensation but have not claimed it yet. Recent FSA figures say that nearly £2 billion was paid out in compensation last year, but that's a small chunk of the estimated £7.6 billion banks and financial companies have set aside to deal with compensation. Some of this money has been claimed but hasn't been paid out yet, which is another issue entirely.
What is PPI?
The trouble is banks were covertly bundling PPI in with other credit products and flogging it at massively inflated prices to customers who didn’t really need it. At the height of the boom years it’s estimated that the banks were pocketing billions every year from the mis-selling of PPI.
How to claim PPI compensation
Banks were forced to review all past PPI sales following a High Court case last year.
So if you think you’ve been mis-sold PPI, here’s how you go about claiming it.
First of all you need to complain to your PPI provider directly. If they try to drag their feet or do not give you a decision within eight weeks, then you’ll need to demand a ‘deadlock letter’, which you can then use to take your case to the Financial Ombudsman Service (FOS).
You’ll be asked to fill out a questionnaire detailing your case, covering things like when you took out the policy, whether you realised you were taking it out at the time, how you paid for the policy and whether you’ve ever attempted to make a claim.
The FOS will then determine whether you have a case, and look at whether you deserve some form of redress.
For more details, check out the FOS’s PPI centre.
Claims management firms
Each year the FOS notes just how many cases it deals with are represented by claims management firms. These firms charge to represent you, in some cases as much as 25% of any compensation you may receive.
But they don’t do anything you couldn’t do yourself, nor does using such a firm make it any more likely that you will be successful! For more on why you should give claims management firms a miss, check out Got a complaint? Avoid this rip-off!
This article has been updated to reflect recent developments