And even if they did need it, it was insurance that was unlikely to protect them in the event of a claim. Perhaps the biggest scandal about Payment Protection Insurance is the fact that many people didn't know it had been added to their loans or credit cards. Leaving consumers unsure and having to ask themselves, "Have I got PPI?" Equally shocking, others were duped into taking it out as they were led to believe it was a condition of getting the loan or credit card.
PPI was supposed to help people if they fell ill or lost their jobs and found they were unable to make their loan or credit card repayments. Sounds great, doesn't it? Sadly, the truth was very different. In many cases, people discovered that their PPI was completely worthless and, despite paying out for insurance, they were left high and dry; all at a time when they needed it most.
The amount of money that has been paid out in claims over the years is disproportionately low compared to the amount that has been taken in premiums. In other words, the banks and providers have been making a lot of money from a product, which in many cases, was useless for the person paying for it.
And that wasn't the worst of it. Sales advisers were heavily incentivised to sell PPI - with customers subjected to a range of sophisticated tactics. Most depressing of all, a huge range of organisations - banks that people trusted like Lloyds TSB, RBS, HSBC and Barclays, as well as credit card companies like Mint, Capital One and MBNA, just to name a few - were involved.
Have I Been Missold PPI?
If you think you may have PPI, the best way to check is to read through the statements below. If any of them ring true, then the chances are you were. If that's the case, then you deserve to get your money back - plain and simple. It's about financial justice - and that's something we feel very strongly about.
1. PPI was not suitable for you
The policy sold to you may not have been suitable if, for example, you already had company sickness cover through your employer. And if you were a member of the Armed Forces, worked in the Civil Service or the NHS, or if you had arranged personal sickness and accident cover elsewhere, you're unlikely to have needed PPI.
Additionally, if you had a pre-existing medical condition, it's unlikely that you would have been able to claim on the insurance because PPI has so many exclusions.
2. PPI was too expensive
For credit cards, PPI was generally charged at between £5 and £28 for every £100 of outstanding balance on the account. So if you had an outstanding balance of £3,000, you would have £150 to £850 added to your balance every month, in many cases interest would have then have been added on top!
For loans, the problem was just as bad, if not worse. PPI could have added between 10% and 26% of the original borrowing onto your total loan amount. However, PPI could have also been added onto your total loan amount from the start which would have significantly increased the total amount you have to repay and you would have been charged interest on the amount you borrowed and the PPI. This is what's called a single premium policy (lump sum added to your loan when it was borrowed).
Have a look at the examples below to see the difference PPI could have had on your loan payments:
Mrs Smith takes out a loan for £5,000 without PPI.
Loan Amount - £5,000
PPI - £0
Total Borrowed - £5,000
Interest (10%) - £500
Total Repayable - £5,500
60 Months at - £91.65
Mr Jones takes out a loan for £5,000 with PPI
Loan Amount - £5,000
PPI - £1,000
Total Borrowed - £6,000
Interest (10%) - £600
Total Repayable - £6,600
60 Months at - £110.00
All this means that poor old Mr Jones ended up paying an additional £1,100 for an insurance policy he may have never been able to use.
You might be interested to know that the FSA (Financial Services Authority) banned the sale of Single Premium PPI in 2009.
3. The PPI policy wasn't explained at the outset
PPI was heavily pushed by banks, building societies and other credit providers because it made them lots of money. As a result, people often weren't given all the relevant information before they took it out, if in fact they never knew they had PPI at all.
Even if they did know they had been sold PPI, most customers weren't told that they may have been able to get the policy cheaper if they shopped around. Many were also not told about the various exclusions, and sales advisers simply didn't take the time to ask if the PPI policy they were selling was really needed, or check that the customer already had sufficient cover elsewhere.
4. You were arranging a consolidation loan
If you took out a consolidation loan, you were doing it to reduce the amount you were paying out each month. As we've shown above, PPI on loans can significantly increase the money repayments and the overall amount that has to be repaid - adding to people's financial burden.
5. You weren't given enough information to make an informed decision
On paper, PPI is a good idea - helping people in times of hardship to meet their financial obligations. But for the policy to be effective, customers needed to be fully aware of all the ins and outs so that they could make an informed decision. For example, many people weren't given advice about the restrictions and limitations of the individual policy, so it was unclear if they'd be covered if they ever needed to make a claim.
6. You were led to believe that PPI was a condition of the loan/credit card
Sales advisers, often under pressure to hit sales targets, led customers to believe that they had to take a PPI policy as part of the loan/credit agreement, or simply didn't mention the PPI at all, and just bundled it within the rest of the loan costs.
As a result, many people simply accepted that the PPI was a necessary evil and that they needed to pay more on top of their loan for the insurance, just to ensure they could get the credit they required.
7. When you took out the Loan or Credit Card, were you one of the following:
- On fixed-term contract of employment
- Working less than 16 hours per week
- Working outside the UK
- A temporary or agency worker
- A student in full or part-time education
- A director of your own company
- Retired or due to retire before the end of the policy term
If any of the above applied to you, then you may have been unable to claim.
How can I find out if I have been paying PPI?
The easiest way to tell if you've had PPI is by looking through your old credit agreement and statements. Now although customers often see ‘Payment Protection Insurance' listed, it's worth looking out for terms like Credit Card Cover, Payment Protection Policy, Repayment Protection Cover, ASU (Accident, Sickness and Unemployment) or Accident Sickness Cover, as PPI was also listed under these names. Basically, you are looking for anything that is listed in the Credit/Loan agreement, or added to your monthly credit card statement, that refers to payment insurance of any kind.
If you don't have any paperwork, don't despair. There are ways we can get the bank to confirm whether you had PPI so please get in touch with us and we'll see what we can do to help.
So what does all this mean to you?
If any of the statements above sound familiar then you may have been mis-sold PPI. We believe that's wrong - as wrong as you being overcharged in a supermarket or restaurant. And that's why we stand shoulder to shoulder with people like you - and work to claim back what's right and rightfully yours.
What can you do to reclaim PPI?
When it comes to reclaiming PPI, you only get one chance, so it's vital you give it your best shot.
There are two options open to you. You can claim on your own, or you can use an expert. Now, we're not going to lie and say that we can guarantee you a payout, that you'll get more money with us or that we can handle the claim more quickly than you would on your own. Anyone saying this risks a call from the Claims Management Regulator.
However, what we do guarantee is an honest, expert, hassle-free service with no upfront costs. Now you might still be wondering who we are - and whether we're right for you. If so, we'd love to tell you a bit more about ourselves - and why over 700,000 people have trusted EMCAS with their claims.
If, on the other hand, you'd like us to start working on claiming back money you could be owed, contact us today. If you've been mis-sold PPI, you deserve financial justice - and the money that's rightfully yours. For a fast, free and no-obligation initial assessment from one of our friendly, down-to-earth advisers, click here.
We'll call you back as soon as possible - and together, we'll win back what's rightfully yours.