Friday, 17 May 2019

Finance Fridays – Claiming PPI before the final deadline

Last week we were looking at holiday travel accommodation scams. This week we are talking about Payment Protection Insurance or PPI. We've all had the cold calls and letters encouraging us to claim but is it really worth doing? If you are thinking about it get your case sorted out as the deadline for claims is later this year.

What is PPI? - It stands for Payment Protection Insurance. It is an additional product sold when people take out a form of credit. This could be anything from credit cards, personal loans, car finance, store cards, overdrafts, catalogue payment account or a mortgage. If you are unable to repay the debt you owed for reasons such as illness or you have lost your job the insurance will start to kick in.

What's the problem with PPI? - Although it can be beneficial to some people it was often added on without being explained properly. People have found they were paying for a product they didn't understand and in some cases even know about. Salespeople and administrators were keen to add it on as they got commission for it or it looked good for their monthly sales targets.

As some PPI policies were added on without shopping around customers could never see if this was the best value policy for them. Also the terms of some of the PPI contracts made them very unattractive. For example if you lost your job you wouldn't be able to claim anything for the first three or six months. By this stage many people had already got another job so didn't get any money back. For those unable to work long term many PPI contracts only paid out for 1 year before stopping. PPI was often very expensive in comparison to what it paid out and what it actually covered. Often this was the case for store accounts where people would pay off the monthly amount owed in full and then not spend anything on it for months.

One of the golden rules of financial advice is to have around three months of salary in savings in order to cover the possibility of being unable to work or losing your job. If someone had this in place already then paying PPI may not have been as worthwhile as adding the equivalent monthly premium to that pot.

When is the deadline?
- The final deadline for all new claims is 29th August this year. Claims that have been rejected can still be put to the Financial Ombudsman after this date.

What can I claim for?
- You can claim where you believe PPI has been mis-sold to you. This is could be because you didn't know it had been added on as an additional product for another policy. Alternatively the PPI terms and conditions were not explained to you and you wasn't told of any other PPI products you could use instead. Another case is where the person taking out a store or credit card has no income to protect (i.e. the card payments are paid for by someone else) and so would never be able to claim on it.

Another rule has come in which means you can also claim if the company who sold the PPI to you earned a commission fee of 50% or higher and didn't tell you about it. I have never come across anyone who who was made aware of such high commission fees!

How do I claim it? - Obviously you can go with one of the myriad of companies offering to get you PPI compensation. There are so many out there that it is quite difficult to know which one to go with. As they are a business and they are doing the work for you they will charge a commission on whatever you receive back.

You can do it all yourself by getting all the details of the PPI together and the companies you dealt with. The basics you should include when writing to any company is your full name and all previous names you have had, your current and previous addresses and your date of birth. Your claim will be processed much quicker if you can provide any details of the PPI policy you had and what product it was attached to. This is why it is always a good idea to keep all paperwork for financial matters even if they have expired years ago. Do not send any original paperwork as it may get 'lost'. If you do need to send paperwork off make sure you have copies of it yourself. If you don't have any paperwork try to think of the dates when you would have been paying the PPI and what your employment status was then.

If are unsure about dealing with it yourself there are a number of websites that provide templates and additional tools you can use. Look at those offered by the Financial Conduct Authority (FCA), and Which.

Have you received a refund of your PPI policy? Was it easy to claim back?


Finance Fridays


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