If you think you may potentially be unable to make repayments on your mortgage, credit card, or loan for a certain set of reasons sometime in the future, there is a type of insurance you can get to help cover these payments. This insurance is called PPI, or payment protection insurance.
For more than two decades, PPI has been sold in the United Kingdom. Most of the time, PPI was sold at the point of card activation in the case with credit cards or packaged into other borrowings at the point of sale. You would be asked whether you wanted to protect your repayments with PPI when you signed up for the agreement, whether it was online or in person. A monthly cost proportionate to the balance of your borrowing would be applied to your account if you decided to get the coverage.
A lot of mis-selling occurred when those who were offering loans insisted that PPI be purchased as a condition of the loan. In some cases, PPI was applied without the customer asking for it.
There is a different name for PPI at each lender or bank. These names include:
- Credit Protection Insurance
- Accident Sickness Unemployment (ASU) Cover
- Loan Repayment Insurance
- Credit Insurance
- Payment Protection Insurance (PPI)
The principles are the same no matter what it is called. The policy steps in if you cannot make your repayments when you become unemployed or are ill. A lot of mis-selling of PPI occurred because many customers’ situations did not meet the eligibility requirements, so the policy providers were not stepping up to cover the repayments.
The root of this issue was sales advisors not checking to see if the customers were eligible to be covered in the first place before selling to them. For example, those who are self-employed, already ill, or older than the upper age limit for some policies were still being sold the product.
Before they can contact the consumer about cover, lenders have to wait at least seven days from the time they issue credit cards or loans. This opens up the market for independent insurance providers to compete, and it reduces the chance of mis selling to an ineligible policy holder. These days, PPI is still readily available, and you have a wide selection of providers and policies to choose from.
So, you have your PPI insurance, and you tried to use it to cover your repayment but were told that you were not eligible for PPI. What do you do next? The first step is to find a good “no win no fee” company to represent your PPI claim.
You may have heard the term “no win no fee” in the past decade or so in legal assistance or injury claims services advertisements. When choosing someone to help you get back your PPI payments in mis sold PPI cases, this “cannot lose” option is emerging as a minimum requirement, and consequently, a lot of companies are making this offer.
Before letting a PPI claims company go to work on your case, you need to confirm that they are following the norm of offering no win no fee PPI claims. There are different ways that companies offer this service, but many of them follow this general pattern:
- The claim is started with the PPI company
- They then see if you have a PPI policy for your loan or credit card
- Your pay nothing and your claim is no longer pursued if they find that you do not have a PPI policy
- A refund claim is started with the lender if you do indeed have a PPI policy and you believe it was mis sold.
- The typical fee is 25 percent plus VAT if the company wins the refund.
- However, you pay nothing if they find that you are not owed compensation and that the PPI was not mis sold.
- A fee is payable if the case is not pursued at your request after the first two weeks.
So, basically, you owe nothing to the PPI claims company if your policy was not mis sold or there is no PPI on the borrowing. And, on that particular credit agreement, you can be sure that you were not mis sold PPI. This is just the general framework of how no win no fee PPI claims work. Before signing anything, you will need to ask representatives from specific companies how their process works.
No win no fee companies can tell with a high level of certainty whether you were mis sold or not when they first look at your case due to their experience with many such cases. There are the occasional odd cases that the no win no fee company will take and not secure compensation. In these instances, the clients learn the outcome was justified and that their case was hard fought.
Picking a PPI Claims Company
There are a number of things to look for when choosing a company to handle your PPI claim. Here are a few:
- The initial stages of your claim can be sped up dramatically if you find a company that already has an agreement with lenders to quickly establish if you were mis sold PPI. Large, professional companies are usually the only ones that have these agreements with banks.
- You need to be sure the company will appeal your PPI claim once it is rejected by your lender.
- If the company knows what they are doing, they will be able to offer you a calculation of your refund.
- Starting and maintaining a claim should be free. This included a free phone number that is mobile friendly.
- Look for signs that they provide good customer support, such as testimonials from previous clients.
- They should have company registration and MOJ authorisation numbers.
- They should also have a verifiable history of successfully winning payouts.
- They have a physical storefront.