Reclaiming PPI In 6 Easy Steps

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PPI or payment protection insurance is a great insurance policy. In case you cannot make the payments on a loan or a credit card, the policy kicks in and covers your payments for a set period of time. This is particularly important if you could not make payments due to redundancy or an unexpected job loss. However, along with these benefits, the policy also has a few catches. The policy cannot be sold to people who are working part-time, or who are over retirement age. As a result, it’s the job of the broker or the bank to notify the customer when they are taking the loan. If the customer is not eligible for the loan, it is the duty of the bank representative to inform the customer that the PPI policy cannot be used by them.

And This Is Where The Problem Started!

Even though sales people and banking representatives were aware of the fact that PPI could not be used by certain customers, they made it mandatory for the customer to buy it. In fact, most brokers and banking representatives told customers that they would not get credit cards or loans till they took on the PPI policy. This was an unethical way of selling PPI and almost 90% of the customers who took on the policy were ineligible for it. As a result, when the time came to claim the policy they did get in touch with the lender; only to be notified that the PPI policy was invalid and the payments would not be done. Thousands of customers complained but it did not really work till the financial ombudsman sat up and took notice. Court cases were filed against the PPI and eventually it went to the Supreme Court.

The Condition Now…

The consumer won. Eventually, the courts decided that the PPI policies were sold falsely to most of the customers. Major banks were instructed to return the payments to the consumers as quickly as possible. The eventual payout is estimated to about 10 billion pounds but the payouts have not yet started. Consumers have yet to apply to the relevant banks so that they can get their money back. However, the process of applying to the banks has been simplified. To help you out, we’ve listed a step by step procedure that you can follow-

  1. Start by collecting your banking documents from the last decade. If you have taken any loans in the last decade, you may have taken a PPI policy. This will show up on the policy statements as a payment going to another bank. Note down the payments that are made to all outgoing banks and collect them together.
  2. Ensure that you calculate the payments that you have made to each bank along with the interest rate with an online ppi calculator. Total up the payments separately as you will have to apply to each of the banks separately.
  3. If you are finding it difficult to calculate the PPI yourself, you can also write to the banks to find out how much you have paid in the form of PPI payments. According to the Right To Information Act, the banks have to let you know the detailed information on the financial transactions you have taken from them.
  4. Check the policies that you have taken and ensure that they do not have special clauses. Ensure that these clauses are not applicable on you and how you can refute them.
  5. Once you have the details, download an application formation from the internet and fill it up. Make sure that you have different forms for loans, credit cards etc that you have to send to separate banks. Send them through registered post to ensure that you have proof.
  6. There is a waiting period of 3 months. If the bank does not get in touch with you within this period of time, you can get in touch with the Financial Ombudsman and the bank to settle the dispute.

The number of settlements has been increasing in the last two years but most people are still unaware of how to apply to the bank and reclaim their money. If you have taken any loans, we suggest you check them all with the help of an online ppi calculator. If you aren’t sure about the details, ask an accountant to help you out in calculating ppi.