PPI Claims Explained. Frequently Asked Questions on Payment Protection Insurance.

1. What is Payment Protection Insurance?

Also described as ‘Accident, Sickness and Unemployment’, PPI was sold to cover loan, credit card and mortgage payments for customers who became unable to work or had lost their jobs.

2. That makes sense, so what’s wrong with it?

An article in The Law Society Gazette suggested there were more than 100 ways in which PPI could be mis-sold. Some of the most common are:
  • PPI was added to your finance without you requesting it
  • You were told it was compulsory in order to obtain the loan/mortgage/credit card
  • You were not told that cheaper cover could be purchased elsewhere
  • You were not asked of any other insurance policies already in place.
  • You were not asked about existing medical conditions which would have meant you could not claim on the policy
  • Policy exclusions were not fully explained to you
  • The PPI did not cover the entire duration of the loan but this was not explained to you – and furthermore you may have been paying interest on the PPI for the entire duration of the loan.

If you suspect you have PPI on your loan / credit card / mortgage / store card, then it’s worth a few minutes of your time to call our trained advisors on freephone 0800 092 1909 for a free, no obligation evaluation. You could soon be claiming back £1000’s.

3. How long has this PPI mis-selling been going on for?

The Times reports that 16.1 million policies have been sold since 1995. Citizens Advice made a supercomplaint about how PPI was being mis-sold in 2005 and since then there has been a rapidly growing number of claims for compensation, and complaints to the Financial Ombudsman Service (FOS).

In January 2008, HSBC owned Beneficial Finance are fined £1m for PPI mis-selling, followed by a record £8m fine in October for Alliance & Leicester for serious failings in its telephone sales of PPI.

By 2009 the FOS was dealing with more than 800 complaints a week. Latest reports say it is now receiving more than 5,000 every week. Lord Turner, chairman of the FSA, tells the Association of British Insurers’ annual conference that mortgage PPIs had become one of its major concerns in the economic downturn.

In July 2010, Lloyds TSB stopped sales of all PPI products in a tacit admission that it was an inherently flawed product.

4. So why has this been in the news so much this year?

It’s a long story – are you sitting comfortably?

Since the supercomplaint by Citizens Advice in 2005, the banks have been heavily criticised in various reports by the Office of Fair Trading, the Financial Services Authority, the Financial Ombudsman Service, and the Competition Commission. Yet they refused to admit they had done anything wrong and even continued to reject many legitimate complaints by dissatisfied customers. This eventually led to the Financial Services Authority (FSA) issuing instructions to the banks in August 2010 (Policy Statement 10/12) for them to improve the way they were handling complaints about PPI.

In a move so brazen it left onlookers gasping for breath, the banks took the FSA to court in October 2010 to challenge these instructions. They then used the court case as an excuse to stop paying out on complaints for seven months – despite their own British Banker’s Association stating that “The only people who can put complaints on hold are the FSA, the Ombudsman or the courts."

5. What happened in court?

The judge threw out their claim. This was announced to the public on 20th April 2011.

6. What happened next?

The banks had until 10th May 2011 to appeal against the court decision. Quite unbelievably (or not actually, if you’d been observing their behaviour to date), they were seriously contemplating doing so. Then Lloyds TSB broke ranks with its peers on 5th May, announcing that it was withdrawing from the legal action against the FSA. Barclays soon followed and eventually the British Banker’s Association confirmed on Monday 9th May that it would be dropping the legal action entirely.

7. What does this mean for my PPI claim?

Your bank will now process it in due course according to the guidelines issued by the FSA.

8. Will I be getting my compensation soon?

Unfortunately, the legal action by the banks means that there is a massive backlog of complaints. This is why you should submit your claim as soon as possible to get into the queue.

9. How big is this backlog exactly?

No-one knows exactly but the Financial Ombudsman has received more than 200,000 complaints to date. To put it another way, Lloyds TSB alone has set aside more than £3 billion to pay off PPI compensation, and the total bill for the banks is reckoned to be more than £9 billion.

10. How much could I claim back?

Each claim is different and we cannot comment on your own until we’ve spoken to you and looked at your finance documents. As a broad rule of thumb, PPI on loans tends to be between 15% and 30% of the loan value. So if you borrowed £20,000, that’s up to £6,000 in PPI compensation, plus statutory interest at 8%.

Some recent successes for our other clients:

  • Mr & Mrs Williamson claimed back £30,327 from First Plus
  • Mr Redfearn claimed back £14,949 from Lloyds TSB
  • Mr & Mrs Wright claimed back £12,539 from Bank of Scotland

11. I don’t have my documents anymore, is that a problem?

Not at all. It costs £10 per loan/credit card, payable to your lender, to make a Subject Access Request (SAR).  If it’s a loan and it’s still active now, then the cost is £1 to make a Section 77/78 request under the Consumer Credit Act. For the sake of £10 (maximum) per loan or credit card, which is paid directly to your lender not to Hamilton Brady you could soon be claiming back £1000’s. A SAR or Section Request is part of the end to end service provided by Hamilton Brady.

12. Can I claim on a closed account?

Yes, although if it’s been closed for more than 6 years, you must have a copy of the original documentation as it will not be possible to obtain a copy from your lender.

13. Will this affect my credit rating?

Your credit rating is a reflection of your creditworthiness, whereas a PPI claim is to regain what belonged to you in the first place (your money). We have claimed back more than £2 million in the last two years alone, and not had any clients feed back to us that they have been affected in this way.

14. Sounds good to me, how do I start a claim with Hamilton Brady?

Either call us on freephone 0800 092 1909, or leave your details in the box on the right and we’ll get back to you ASAP.

A ‘claims’ pack will then be sent to you. This contains

  • a form of authority which you need to sign to allow us to act on your behalf
  • our terms & conditions
  • a claims questionnaire to help us establish your circumstances.

As soon as this is returned in the freepost envelope provided, we’ll start your claim and there is little else for you to do – although we may ask you further questions to help support your claim (unlike many claims companies that send out a generic letter, we will tailor your complaint to your personal circumstances).

15. My lender has contacted me with an offer, what should I do?

Please beware before signing anything. Lenders are notorious for making a ‘goodwill’ offer that is only a fraction of what you are entitled to. Our claims team have analysed thousands of PPI compensation claims and will be able to work out what you are owed. If the offer does not come near this, we can advise you to reject it.