PPI - Some Notes for Claimants..

[reidnet]

PAYMENT PROTECTION INSURANCE

Before reclaiming or cancelling PPI you should have a look at the following Notes and see what type of PPI you actually have. Always consider all the facts and figures before starting a claim.. Whatever you do Do Not Just Jump In without researching your own policy, and don’t be afraid to ask for help / advice on the forums on CAG.


There are basically 2 types of Payment protection Insurance policies.

1) Monthly paid premium (as used by most of the credit card companies)
These policies should not be a big problem to cancel; normally they will cancel this type of policy if you write to them or Phone them. Of course if you consider that you have been mis sold this type of policy you can of course try and reclaim all the premiums that have been made, plus claim the interest on each payment at the Contractual Interest Rate.

2) Single Premium Policy (these are the biggest rip off ones) These policies are
Paid for in full to the insurance company at the start of the policy. Most loan
Companies will finance the full cost of the policy by adding the cost onto your loan. What they do not tell you is that you will also be paying interest on that amount at the loan interest rate for the full term of the loan.

Example 1. PPI Cost £3300 Interest Rate 7.9%APR Interest payable over the 5 year loan = £1300 Actual cost of PPI cover £ 4600.00

Example 2 PPI Cost £3300 Interest Rate 7.9%APR Interest payable over the 15 year loan = £3913.00 Actual Cost of 5yr PPI Cover £ 7213.00

As some loans have variable APR the costs used in the above examples could be in fact a lot higher.

Most of this type of Policy will cover you for 60 Months (5yrs) so beware if you have taken out one of these policies and have a loan which runs over the 5 year period. As in example 2 you would require a further 2 * 5yr PPI policies to cover the full loan period.

I did one calculation on an original loan of £17,000.00 , when the PPI was added and calculated to cover the 15yr period; with an APR at 7.9% fixed the actual cost to repay the loan was calculated at almost £55,000.00.

Cancelling a single payment Policy, This can be a bit trickier than a standard monthly paid policy. These policies will offer a very small percentage of the premium should you just cancel it. An example of this is shown below. Their answer to this part is normally that the insurance premium pays more in the early stages of the loan as there is higher risk. (Yeah - higher risk to the lender and not the Customer)

£3300 policy which had been running for 3yrs, Refund of £97.00 if cancelled.

Some companies will state that the only way that you can cancel one of these policies is to refinance and settle the complete loan agreement with a new loan without PPI on the new loan. Some of the lenders will also try and fob you off with excuses like, you may not get a new loan at the same low %APR without PPI. Some will also state that you may not in fact be able to obtain a new loan from them at all; this of course is all scare tactics to try and make you change your mind about cancelling the loan etc. If your credit rating is not good then they will use this against you too.

In my own case I managed to obtain a new loan from another provider at a far better %APR (5.8%) rate without PPI, though they did really try and sell their PPI..lol. I also took out a stand alone PPI policy from an Independent provider at well under a tenth of the cost I was quoted from the new Lender. Personally I have nothing against PPI Insurance, in fact I think it is a good thing as long as it sold properly and not at an extortionate rate like it is by the major High Street Banks and Loan Companies.

3) Mis Sold Policy The mis selling of these policies is a major concern not just for
Consumer but in fact the FSA and the OFT are looking into this whole
matter.

Have you been Mis Sold PPI. (Some standard Conditions for PPI)

a) Payment Protection Insurance cannot be made a condition of obtaining a loan. (This is the most common reason for mis selling)
b) You are permantley resident within the United Kingdom
c) You are Over 18 and Under 65 at the commencement of your loan, and you will not reach the age of 70 during the insured term.
d) You are in Full time employment – Some policies define Full time employment as being working Over 16 Hours per week and that you have been in full time employment for at least 6 Months prior to the start date of the policy.
e) Pre Excisting Medical Conditions may also Invalidate your Policy
f) Some policies may cover if you are self employed.. Check your T & C first though.

** Latest Additions to be added to above (thanks Todge)**

1 You were not in work or self employed at the time of sale

2 You were told that you had to take the PPI out at the same time as the loan or not at all

3 You were not asked whether you had any other insurance which would cover the loan

4 You were not told you could buy PPI elsewhere to cover the loan

5 You were sold a policy which had age restrictions which you fell outside of

6 You were led to believe that Payment Protection Insurance was compulsory

7 You were told that you would stand more chance of getting the loan if you took the Payment Protection Insurance

8 It was not explained to you that there were certain exclusions within the policy that could affect you

9 You were pressured into buying the PPI

10 You paid upfront for the PPI but it was not explained that there were some PPI policies where you could pay monthly

11 Your PPI was an upfront premium and you repaid the loan early and received no refund

12 You increased your loan and the PPI was increased automatically

13 The Terms & Conditions of the small print were not fully explained to you


You should in the first instance read through the full terms and conditions of your Payment Protection Insurance Policy. If you do not have these I would personally advise you to contact the Insurer and request these. If you do have to contact the Insurer for a copy of the terms and conditions you will need to know the date that you signed up for the policy, Request a copy of the terms and conditions relating to the policy that they had in place on that date.

I would personally always deal with complaints regarding PPI by way of letter, unless you have the ability to record any telephone conversations regarding the complaint.
Obviously should you have to take the complaint to court, the more evidence you have in writing the better.

Some Interesting Facts Regarding PPI.

On some Single premium PPI policies the actual cost for the insurance can be a low as 10% of the cost charged by the lender …That’s a whopping 90% straight profit for the lender.. Plus of course the extra Interest that they will make.

Out of all the types of Insurances Policies available ( Car, Home etc) PPI has the lowest percentage of payout in claims, Making PPI the most profitable Insurance Policy currently on the market.

Payment Protection Insurance has the highest rate of claims for Mis Selling than any other Insurance policy available.

Most policies will only pay out for 12 Months maximum in any 1 claim.


I hope this has helped, If you have any queries please do not be afraid to ask for help or advise in the forum.

If you find any Interesting information relating to PPI I would be grateful if you could pass it on to me, I’m on a bit of a Mission with PPI..lol

Additions to Post 22/3/07..


Reclaim your PPI premiums

There's no need to pay someone a fee to pursue your mis-selling claim. By following our guide - and using our letter template - you can right the wrongs committed by your bank or lender. You will find the downloadable letters at the bottom of this page.
Here we explain how to decide whether you have a case for reclaiming your premiums, and how to go about it:
The background
Payment protection insurance generates billions of pounds for banks and building societies and is widely recognised as being routinely mis-sold. The policies are designed to repay a particular debt if you find yourself out of work. We know of many instances when borrowers have been forced to buy an expensive policy as a condition of being offered a loan.
{I:1}
Do you have a mis-selling claim?
• Being forced to buy a PPI policy in conjunction with a loan does not breach FSA guidelines. But the FSA says that fact does not exclude borrowers from making a mis-selling complaint to the Financial Ombudsman, who assesses whether the way the policy was sold was fair and reasonable.
Banks and lenders who subscribe to the Banking Code agree they will not force customers to also buy their payment protection insurance, but they can insist on them having some form of PPI.
We have heard a litany of complaints from borrowers who say unscrupulous salespeople told them they would not get a loan unless they signed up to the lender's own protection insurance. If this has happened to you, you should pursue the bank through its usual complaints process. If you have no success, the next step is to complain the Financial Ombudsman.
• You may also have a case for mis-selling if you have been sold a policy while you are self-employed, unemployed or retired – all of which make PPI void. PPI policies are valid only for people who are employed by someone else and the lender or insurer should have checked your employment status when they sold the policy.
• Most policies do not cover you for loss of income caused by a wide range of illnesses or ailments, including mental illness and back trouble, which keep thousands of people off work each year. A lender or insurer should warn you that illnesses like these, and other pre-existing conditions that might keep you off work, will not be covered.
• If a lender sells you a PPI policy with a card or loan, it significantly increases the interest rate you will be paying. Lenders are obliged to advertise the total APR so you know exactly how much your monthly repayments – including insurance – will be. If they haven't, you can pursue them for mis-selling.
The lender should also have explained to you the full cost of the policy, and how your monthly repayments without insurance would be affected by adding insurance to the loan or credit card agreement.
If your lender did not do any of these things, you may have a claim for mis-selling.
Additionally, you may have a claim if you have tried to cancel your PPI policy, and have been refused, or if you have cancelled the policy part-way through the loan period and received a smaller reduction in monthly payments than you were expecting.


Template Letter 1


[Your address]
The Complaints Department
[Lender’s address]
[Date]

Dear Sir/Madam,

Ref: [Your PPI policy number]

I believe I have been mis-sold a payment protection insurance policy and would like to request a full refund of my premiums, plus interest paid.

I took out a £xxx loan/credit card at your […. Branch] on [date] and also bought a payment protection policy which would cost me an extra £xxx over the life of the loan. [The name of the salesperson who sold me the policy is ...] The total amount of my premiums plus interest is £ xxxx.

I am [self-employed/work as a contractor/unemployed/retired] and therefore will not be eligible for any payments from the PPI if I find myself unable to meet my debt repayments.

Possible additional paragraphs – include the one which applies


[Your salesperson knew this at the time of sale but did not point out to me that this would make the insurance policy useless to me.]


or

[Your salesperson did not check my personal circumstances at the time of sale, which they are under obligation to do. If they had done, they would have realised that a PPI policy was useless to me.]


Insurers are under an obligation to ensure that the policy they are selling is appropriate to that customer and clearly, as my employment situation means I am unable to claim on the policy, you have not fulfilled this requirement.

I am requesting a full refund of all my insurance payments, plus interest, which total [£ xxx].

If I do not receive a favourable response from you I will pursue this claim through the Financial Ombudsman.

Yours sincerely


[Your signature]



Template Letter 2



[Your address]
The Complaints Department
[Lender’s address]
[Date]

Dear Sir/Madam,

Ref – policy number

I believe I have been mis-sold a payment protection insurance policy and would like to request a full refund of my premiums, plus interest paid.

I took out a £xxx loan/credit card at your [branch name] branch on [date] and also bought a payment protection policy which would cost me an extra £xxx over the life of the loan. [The name of the salesperson who sold me the policy is …] The total amount of my premiums plus interest is £ xxxx.

When I took out the loan, I was told that my application would be refused if I did not also buy a PPI policy. The Financial Services Authority’s advice to consumers is that, while it does not breach FSA guidelines, a borrower should not be refused a loan if they choose not to buy an insurance policy.

Possible additional paragraphs – include any which apply to you


[I also told your salesperson that I had adequate insurance cover through a separate income protection policy.]

[I said I did not need the PPI as my employer provides a generous illness and redundancy package.]

[You are not allowed to make PPI a condition of taking out the loan unless you include the costs of PPI in the quoted interest rate, which you did not do.]

[In forcing me to buy this policy, you have also breached paragraph 8.6 of the Banking Code, to which you are a signatory.]

I do not believe being forced to buy this policy as part of the loan was a fair and reasonable obligation as I did not need this insurance and said at the time of taking the loan that I did not want it.


I am requesting a full refund of all my insurance payments, plus interest, which total [£ xxx].

If I do not receive a favourable response from you I will pursue this claim through the Financial Ombudsman.

Yours faithfully,

[Your signature]


Hope these additions are Helpful..


Ian

[Keith22]

Hi Ian

Good post. Do you want to add a bit about Pre-existing Medical Conditions. Most policies have a clause about this which the seller of the insurance should have brought to the attention of the client at the time. If they did not draw it to your attention and you have a condition which might make it very unlikely you could make a claim then this is also mis-selling. It is one of the reasons why I won my complaint through the FSO against LloydsTSB.

[reidnet]

Thanks Keith..
I have added that in to the above post. I have asked if the post can be made into a sticky so the info is always available at the top of the forum.

Ian

[Bicester1]

Hi reidnet!

Nice post very helpful!

What I cannot get my head around is the statement that a loan cannot be made conditional on taking out PPI. This would seem to be just and fair but I cannot find anything in consumer regs, common, or statue law that deals with this. Can you point me in the direction of any decided cases? The only thing I can come up with is the concept of economic duress or unconscionable behavior but this is in equity, not common law, which is a tricky area. Any legal eagles amongst the mods?

What is clear, as you say, is the illegality of adding the PPI premium to the loan and then charging interest on the total sum. For info to others the case is: London North Securities Ltd v Mr and would seem to give us more ammunition.

I think also that if they fail to warn you about single premium front end loading it might be possible to get them on that duty of disclosure etc. but this is all a bit soft in comparison with the bank charge issue where the law is much clearer.

What do you think?

I have sent my prelim off but as yet no reply!

Bicester1

[reidnet]

Hi Bicester1,
I read the above case some time ago, Im sure I have a printed copy of it in one of my now many folders..lol. Im not too sure if there is actual common law relating to the PPI situation. I know that this type of Policy is supposed to always be optional and cannot be made a condition of receiving a lon or service. Perhaps someone within the Insurance industry may manage to clear this up once and for all.
I have confirmation of this fact in writting from the FSA in a reply to one of my many complaints.

I am almost certain (from my own experience) that these companies prey on you when you are in a vulnriable position, they know that you obviously need the loan for sure and take advantage of the situation by implying that if the PPI is not taken out then you wont get the loan. When you look at the commision rates and profit that these policies generate it is not hard to understand why there is so much hard selling of this product from the major lenders. Profit on some of these policies to the lender can be as much as 90% of your premium, this of course can be backed up by the fact that you can buy PPI from and independant insurance company for anything up to a tenth of the cost that these lenders charge.

With both the FSA and the OFT currently investigating this market, eventually we may find that these lenders have to change the way they sell and price their policies. Of course I have no doubt that should the FSA make a ruling on this it would only affect new policies and not help the many thousands of people that have been caught but this to date.

The most common answer I have seen when you complain about this to the lender is that you agreed to the PPI so tuff luck. They of course know that many consumers have been , Bullied, pressureised, mislead and lied to when they are desperately trying to obtain loans. These companies are nothing more than parasites in my eyes.

I am truley hoping that with the Publicity being raised on this matter will eventually let as many consumers know all the pitfalls etc of this disgraceful market by the major lenders. I am at the momment in discussion with another 2 national newspapers who are planning features on PPI.

Ian

[Bicester1]

Hi

Yes you are absolutely right. I've only had PPI once from Lloyds and that was when I needed a loan and had no other options. I was told that if I wanted the loan I had to take the insurance!

Equity might give some relief but this is fairly specialized law and I understand that the courts might not be too sympathetic as a claimant in equity must have "clean hands!" There is a concept of one party in a contract behaving in an unconscionable manner

The other option would be under contract law in that contracts signed under duress are not enforceable but I'm not a lawyer!

It does seem that you are the only one on this site who has won with PPI but I guess we are where the bank charges forum was a few years ago. It does seem that momentum is building and I think this is going to be the next big financial scandal after endowments, pensions and bank charges!

I must say that I was totally naive and actually trusted my bank! I guess I still had an image of "my" bank manager like Captain Mannering, instead of the snake oil salesmen they seem to have become whose sole raison d'etre seems to be to help themselves to as much of our hard earned cash as they can.

I think that this forum will grow and grow. We need some templates and a library, the OFT report link I posted doesn't seem to work now, as it is a distinct issue from Bank Charges. Pezboy did refer to some internal industry rules - we need to see if we can get hold of them. Any insiders lurking out there!

You say you have it in writing from the FSA that policies should be optional any chance of you posting this! I assume tho that the FSA regs only apply since they assumed responsability for regulating the industry.

Bicester1

[sonic007]

my husband has a loan from LloydsTSB, borrowed £5.700 on his contract it has a LOAN FOR LOAN PROTECTION INS OF £1,696.14 adding APR of 16.2% and interest on loan amount he is paying back TOTAL OF £10.582.80. I have read his Personal Summary and says because he was not in continuous employment for at least 6 months therefore unemployment cover is not provided, he is self employed can he cancell this and get another ins seperately?

[Bicester1]

Hi sonic

As I understand it you were mis sold see London North Securities Ltd v Mr

They should noty have added the insurance premium to the loan and then charged you interest on both.

But note that I am not a lawyer!

Bicester1

[bennett01]

Hi all I too have had PPI with my loans over the past 6 years and on each time have paid off the loans many years early but it was only dec last year i looked at all of my loan contracts and on each time i took a ppi insurance because i was told each loan i took out it canccelled the ppi that was in place. all these insurances was with hamilton. but i thought i will ring them to find out what policicy i have with them i was shocked to here that all of the policies that was sopposed to of been cancelled was still in place going back to 2002. without looking but i am i would have 5 ppi still ongoing so these were not cancelled the made me take further ppi for each loan when it was not needed i am looking at all of the loan aggreements which i have for each loantaken out.

[harrythehawk]

I have found some PPI on some catalogue statements which increases and decreases each month with the balance ? Is this normal ?

[reidnet]

Hi Harry,
I havn't come across ones like that but it could well be a standard thing, PPI cost calculated as a percentage of the current balance.
It would be Interesting to see the terms and Conditions of one of these policies..

Ian

[qprouk]

[quote=Bicester1;518133]Hi reidnet!
my PPI with morgan stanley was when i claimed against it for 24 months
but what morgan stanley did was they added another PPI insurance to my repayments i asked them what where they playing at,they said it was in case i had another illness,i am disabled through my illness(permenat)so when the payment from the PPI was ending they then started demanding that i clear up the bill that began at three thousand when i was ill and after the 24 months it stood at 4200 so i was no better of i was in a worse mess and also i remember during my conversation with morgan stanley they said that i shouldnt worry about repaying anything when the insurance had paid their bit as they would more than likely right of the whole debt,even during the repayment period i was havibg judgements against me because the insurance company where slow in paying
i know the phone calls where recorded and i have demanded copies of the tapes they deny their is any transcripts,they also know the recorded conversations would put them in hot water ,so i am in a dilema as my illness causes me to have memory loss short term and also my attention span is limited to about 1 hour towards whatever i am doing so as for me filling in legal stuff i am at a loss i am also housebound anyway i wont go on as we all have problems but i love coming on here and could nt do without it
thanks for all your help to everyone
pat

[reidnet]

Hi Pat,
Sorry to hear of all your troubles, I am sure with the help from CAG we should be able to try and sort this mess out for you.

Firstly it may be a good idea to start a seperate thread so that it can be seen easier by others too.

Firstly I would submit a Subject Access Request under the data protection Act to obtain full details of your account with Morgan Stanley, also include that you require copies of all the original agreements and documentation relating to PPI.

If they just added a second PPI policy onto your account without you Knowledge or consent, I would consider that a bit underhanded, they cannot just go amending Consumer Credit Agreements without your consent. It would be advisable that when you submit your Subject Access Request that you specifically mention this additional PPI agreement, they will have to supply you with a copy of the application and agreement.

Were you actually claiming under your first PPI policy when they added on the new Policy ?.

If you need help with any of the letters etc just shout ..

Ian