Thread: PPI - Some Notes for Claimants..

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


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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

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

Hi,


If I get some time in the next few days I will have a look at making up thread with Template letters.

Ian

Hi

This is my prelim which you are well come to cut and past as you need. See also reidnets prelim.

http://www.consumeractiongroup.co.uk...ight=Bicester1

Hope this helps.

Bicester1

HERE IA HOW WRAGG & CO report on PPI market being referred to the Competion Commission

http://www.wragge.com/files/PPI_Feb07.pdf

I like it, I like it a lot. I especially like the bit about the claims ratio of 20% against all other insurances 84% payout's. what is it trying to say, I think it's saying that PPI is a complete rip off and that something seriously needs to be done about it.

I would say that 'repayment cover' is in fact PPI under a disguised name..

Ian

From TimesOnline



Banks braced for billions in claims

The City watchdog has given consumers the green light to claim for ‘useless’ debt insurance, which many people don’t even know they have. Once they do, the revolt could be bigger than bank charges. By Clare Francis

Banks face being hit with billions of pounds in compensation claims for “useless” debt insurance in a consumer revolt that could be bigger than that over bank charges.
Millions of people with overpriced loan insurance — supposed to cover repayments if you can’t work — have been given the green light to claim for mis-selling after two announcements from the Financial Services Authority (FSA) in the past month.
Insiders say the scale of the scandal could eventually dwarf bank charges and even endowment mis-selling. There are some 20m loan insurance policies worth £5.5 billion in Britain, and one industry insider, who wished to remain anonymous, thinks as many as 70 per cent could have been mis-sold. If so, the industry could face claims worth up to £3.85 billion from 14m people.
By contrast, about 2m people are thought to be reclaiming ‘illegal’ overdraft charges at a cost to the industry of up to £1.2 billion a year, according to Credit Suisse, an investment bank.
function pictureGalleryPopup(pubUr l,articleId) { var newWin = window.open(pubUrl+'templ ate/2.0-0/element/pictureGalleryPopup.jsp?i d='+articleId+'&&offset=0 &&sectionName=MoneyCon sum erAffairs','mywindow','me nubar=0,resizable=0,width =615,height=655'); }Related Links

·Protection cover in the dock again
·The biggest scandal since endowments
Consumers have not yet started to revolt against debt cover, though, because so few know they have it: firms often add it to your loan without asking.
This is exactly what happened to Nasim Kanji, 58, a university lecturer from Oxhey in Hertford-shire. She did not realize she had been charged £9,000 for insurance for a £62,000 loan secured on her home until she went to Chase de Vere Mortgage Management, a broker, to remortgage.
Not only did the policy account for 15 per cent of the loan, but she would never had needed it anyway because she had savings set aside in case she lost her job.
Kanji said: “I had no idea I had been sold the insurance until it was pointed out by my adviser. I was horrified when I found out how much it had cost me. There is no way I would have taken out such insurance because I have assets that would cover my payments were anything to happen which stopped me working.”
Simon Tyler at Chase de Vere said: “This was terrible advice and there is no way such a policy was suitable.”
Consumers are therefore being urged to check their loan, credit-card and mortgage agreements to see if they have been sold protection insurance without realising it. If so, you have a very good case to lodge a claim.
An announcement last week by the FSA, the City watchdog, could open the floodgates. It said that people who had been sold single-premium policies, where the cost of the cover is paid upfront and often added to the loan, could now be eligible for refunds if they cancelled the loan part-way through the term.
In the past insurers pocketed the money. Now customers who have cancelled policies and got very little back are being urged to complain to their providers.
Matthew Turley, 30, pictured with his girlfriend, Rachael House, and their two children, Mitchell, 10, and Mia, 3, could be entitled to a refund. He took out a car loan for £4,700, but was charged an additional £5,612 for debt cover. Once this and the interest were added to the loan, his repayments would have totalled £14,537 — three times the amount he borrowed. This was not explained to him but he soon realised the mistake and repaid the loan. Even then he still had to pay £6,740 — £2,000 more than he borrowed.
He is in the process of trying to reclaim the £2,000 plus the interest he was charged.
The scandal goes beyond single-premium policies, though. The FSA indicated last month it thinks all payment-protection insurance has been systematically mis-sold for several years.
In a speech last month, Stuart King of the FSA said: “Our work in the PPI [payment-protection insurance] market has demonstrated it has not been sold correctly over a prolonged period. We have seen too many real cases of individuals who do not appear to have been fairly treated when purchasing PPI.”
Claims firms such as Brunel Franklin think the scandal could be even bigger than the FSA realises. They are just starting to win payouts for clients who have been mis-sold debt insurance, and they reckon the average refund could be in the region of £2,000 to £3,000, compared with about £1,400 for bank charges.
Ian Allison of Conkers, Brunel’s claims-handling firm for PPI, said: “The FSA’s speech was pretty explicit for a regulator, but I still don’t think it realises how huge this will be. We are just seeing the tip of the iceberg.”
The Competition Commission is also looking into PPI, following an inquiry by the Office of Fair Trading that concluded consumers had been stung for some £1 billion through the sale of overpriced debt cover. Since only one in four policies pay out, the cost to the consumer is even higher.
About 7m PPI policies are sold each year by banks and building societies when people take out loans, mortgages and credit cards. High-street stores also push the cover to customers buying electrical goods using instore finance arrangements. However, consumers can pay up to 10 times more for cover from these firms than they would from a stand-alone provider such as the Post Office or Paymentcare.
The policies are designed to cover your loan repayments if you can’t work due to an accident, sickness or redundancy, but they have many exclusions that are rarely explained at the point of sale. For example, PPI does not cover the self-employed, students or housewives. Nor does it pay out if you are sacked or have preexisting conditions that are not declared on the application form. Certain illnesses, such as stress and back pain, are also routinely excluded.
Teresa Fritz at Which?, the consumer lobbyist, said: “When the insurance was sold, the adviser should have explained it and investigated whether it was suitable for you. In most cases this hasn’t happened, so anyone who has PPI and doesn’t think it’s right for him or her should complain to the company that sold it.”
Ways to reclaim your money
Payment protection insurance — was I mis-sold?
If you were sold a policy that you later discovered was unsuitable, perhaps because you are self-employed, you can claim for mis-selling. You can also claim if you were never told about the cover or it was not explained fully.
What does the FSA’s latest announcement mean?
It relates to single-premium PPI policies where customers are charged a lump sum for cover that is added to their loan. The FSA estimates about a third of policies have been sold in this way. Many include ‘nil-refund’ clauses — if the cover is cancelled during the term, the policyholder is not eligible for a refund. This has been banned.
All new single-premium policies must include a ‘partial refund’ clause. The size of the refund will depend on how far into the term you are when you cancel. People who have made claims on their policies will not be eligible. Firms must also apply partial-refund conditions to all existing policies. Millions of customers who have cancelled policies in the past and received no refund are now being urged to ask their insurers for their money back.
So how do I lodge a claim?
Write to the company that sold you the policy. Ask for the cost of the PPI, plus any interest, to be refunded. You may also be eligible for claiming lost payouts, if you were turned down on a policy that you should never have been sold. The firm must reply within eight weeks. If it fails to do so, or you are not satisfied with its response, take your case to the Financial Ombudsman Service (financial-ombudsman.org.uk) or the small-claims court.
Bank charges — am I eligible?
If you have been charged a penalty fee for going overdrawn without permission or for having a direct debit refused, you can ask for the money back. If the Office of Fair Trading imposes a cap on the amount that can be charged, you are likely to get only the difference back. In the meantime, banks are refunding the full amount.

This refers to all insurances including PPI's and Mortgage Indemnity Guarantees which are often sold as 'House Insurance'


Tide

Originally Posted by Demtootief

Is Payment Protection Insurance (PPI) the same as Payment Protection Premium (PPP)? I have been sold one with a £28000 secured load with Barclayloan at 10.9% APR which has increased to 11+% as a result of all the recent rate rises. The amount of the PPP is £5680.05 and based on what you have said, I will be paying a huge amount of money in interest on this amount. I have every intention of claiming if I can.......Can you advise please?

Thanks

El

Hello,

Yes it is the same, they have al different ways of selling it

Payment protection insurance - The OFT's reasons for making a reference to the CC

Important link to read

Protection racket

This the information from the FSA website, it clearly puts the onus on the seller to ensure that everything is properly advised and done in the best interests of the customer - even on "non-advised" sales:



What is the difference between an advised and non- advised sale of PPI?

In short, you give advice when you make a personal recommendation to the customer. A non-advised sale is when no personal recommendation is made to the customer.

For all sales, both advised and non-advised, a firm must pay due regards to the interest of its customers to ensure that appropriate information and disclosures are made to the client and that communications are clear fair and not misleading.

A non-advised sale cannot be led by the adviser and they can only confirm that they offer a number of products, or one product, that the customer chooses themselves.

More information is available in our factsheet: Advised and non-advised sales.

Here's a copy of the GISC guidelines for Private Customers. This is from their Rules which were operative between 03/07/2000 and 14/01/2005.