Payment protection insurance is a good way to protect you in case of problems. In case you have a loan or credit card with pending payments and you cannot pay the premiums, the PPI kicks in and covers the debtor till they can get back on their feet. This may seem trivial but at the right time, it can provide a huge helping hand. Most customers opt for PPI thinking the same thing but imaging their surprise when this does not happen!
What actually happened?
PPI was supposed to cover a customer in case they could not repay their loans. However, as with any other insurance policy, PPI had eligibility claims. The policy was not open to senior citizens, part time workers and several other categories of people. Unfortunately, banking representatives mis-sold the policies to customers making them compulsorily buy the policy as a part and parcel of the entire loan. This made unwary and ineligible customers a part of a huge mistake. They made payments regularly but when they required help, they were told that they were ineligible for the help. This resulted in several complaints to the financial authorities and eventually several court cases. Fortunately, the Supreme Court ruled in favor of the customers and now banks have been directed to repay the amount to customers along with interest payments.
Customers can now claim back PPI payments from the lending institutions through a simple payment process. We have listed the steps here and we urge you to claim your payments back quickly before the time period set by the Supreme Court lapses.
1. Start by tallying your accounts — All you have to do is start by collecting your bank receipts or lending statements for the last five years. PPI payments will reflect as payments made to a third party insurance company. If you aren’t sure of how to do this, we recommend that you ask an accountant or third-party to help you out. You can also use an online PPI Calculator to help you understand the claims process and payment due to you.
2. Download the letter — The PPI Claims process starts with a simple application process. You can download the PPI letter from the financial ombudsman authorities. The letter has to be formatted and personalized as it will be different for each lending institution. Make a copy of the letter and send it through registered post to ensure that you have copy for review.
3. Wait for the bank to get in touch with you — Most lending companies will get in touch with you in about 40 days. They will let you know your eliiblity for the claims process and how much you can claim from them. Please note that you have to get a reply back in 40 days to three months. If you do not get a letter, please write another letter and then contact the financial ombudsman for resolution.
4. Claim your money — The money is deposited into your account and you can claim it back immediately. However, you should know that some banks will pay you back over three months.
5. Hire a professional — If required, you can hire a professional agency that will help you with the claims process. They will do the entire process of applying to the banks, processing the applications and then collecting the money. However, you should know that they will also collect about 30% of the loan amount as their fee and this will mean a huge loss for you. When you apply to the banks yourself, you do not have to pay anything at all and you can collect the entire amount plus interest which actually comes to a large amount. Take the time to do the process yourself as it is easy. You can easily ask for help from online or realtime charitable organizations.
We hope this simple guide has helped you understand a payment protection policy and its workings. However, if you are in the vast majority who were mis-sold the policy, we urge you to claim your payments back from the right authorities. As you already know, the claims process is simple and straightforward and you can actually get as much as 1000 pounds plus interest if you calculate your PPI properly.