Reclaiming Payment Protection Insurance: Safety and Scams
Around three million borrowers in the UK could be eligible to reclaim mis-sold payment protection insurance (PPI). Unfortunately, where money is involved, there will always be companies and scam artists looking to make cash from a customer’s compensation claims.
Can I Really Claim Compensation Over PPI?Now that the banking industry has given up their legal battle over the mis-selling of PPI it is easier to claim for mis-sold policies. Most of the banks have set aside money specifically for PPI compensation claims. Barclays has a PPI compensation fund of £1 billion, and banks such as the Royal Bank of Scotland have already paid out and put aside millions for compensation claims. In effect this is simply money set aside that the customer has already paid to lenders through mis-sold PPI policies.
How Do I Know If I Have Been Mis-Sold PPI?There are a number of methods that the lenders used to mis-sell PPI policies. Lenders may not have fully explained to the customers whether the policy was actually right for them. For instance, these policies were not usually suitable for people who were self-employed but this clause was not usually explained to the customer. If a borrower took out short-term loans the PPI policies would not be the best option but lenders did not make customers aware of this. In certain cases the lenders would make it known that loan applications would not be looked upon favourably if the protection insurance policy was not taken. Some customers were not even aware that PPI had been added to their borrowing application.
How Far Back Can I Reclaim PPI?The general rule is that customers can claim back for policies that are in use now or have ended in the last six years. The reason for the six year rule is that lenders need only keep paperwork that dates back six years. There may be certain circumstances whereby customers can claim for policies that do date back longer if they have the relevant paperwork. Successful PPI claims should include a full refund plus interest.
How Should I Reclaim My PPI?There are a number of different ways to tackle the process of reclaiming PPI and it is a fairly simple procedure. Customers can easily start their claim by contacting their bank or the lender who sold the policy. The lender may actually refuse the claim but this doesn’t mean the customer should not pursue further. A deadlock letter should be requested and the complaint can then be taken to the Financial Ombudsman Service.
Should I Use a PPI Claims Agency?Financial companies have jumped at the chance of a new way to make money from PPI claims. Many financial compensation companies are ringing customers at home to offer their services. They will often obtain customers details from debt collection agencies or from bankruptcy notices. Some of these agencies will say that they do not charge a fee for undertaking this service. But these agencies, if they do actually make a successful claim, will take around 30%, sometimes higher, from the final compensation figure. The customer can end up paying out a large chunk of their compensation to these ‘financial claims aid’ companies.
Are There Straight Out Scams Involved with PPI?Many people would say that the lenders who supplied the PPI policies are the original scam artists. But where money is involved there will always be unscrupulous companies looking to part the unwary from their cash. There are companies that will call customers claiming to help with compensation and will charge an upfront fee for this. Once the fee is paid the company or scam artist will disappear. In some cases a company will start the process by simply obtaining a claim form and sending it to the customer and this could easily have been undertaken by the customer at no cost.
How Do the Scammers Make Money From PPI Customers?There are two common methods that the scam artists will use to obtain the customer’s money. The scammers will ask for an upfront fee to undertake the claims process on behalf of the customers. If this is a scam then the scammers will also ask for bank details in order to place the refund into the customer’s account.
Customers should not be fooled into giving bank details over the telephone. This is an easy way for scammers to obtain bank details and can then also lead to identity theft and fraud. Similarly, never give out bank details via email if scam artists or companies contact in this way.