Category Archives: Industry Topics

PPI claims – hundreds every day

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Recent figures in the media have shown that around 1,500 new claims for mis-sold Payment Protection Insurance (PPI) are sent to the Financial Ombudsman Service every day.  It is said that complaints now total 400,000 since the scandal first broke in 2008.  The ombudsman becomes involved when a dispute between a financial institution and one of its customers cannot be resolved between them, as in the case of many people who claim PPI compensation.  To vindicate those who brought the scandal to light, the ombudsman service has found in favour of 70% of cases where people reclaim PPI.

The main reason for PPI is so that people could keep up repayments on a loan, mortgage or other financial product, such as a credit card or store card, if they were to fall ill or lose their job.  While this is in theory a good product, it was often sold to people who would not have been able to claim, such as the unemployed or retired, or sold to people who didn’t realise that it was not mandatory to purchase PPI, or that the cover was available elsewhere.

In total, the big High Street banks have put aside £9bn to compensate customers who were mis-sold PPI.  And there is no way of knowing when the claims will stop.  Obviously, when the scandal broke in 2008, banks and other lenders realised that they were in the wrong and had been caught out for mis-selling PPI, but it is unclear how many more borrowers are still entitled to claim.

People are quite rightly making enquiries or complaints to the ombudsman if they feel they have been mis-sold PPI.  But this is having an adverse effect on the ombudsman’s office.  It is a public service to represent the citizens of the UK, but its workload is growing daily, and there have also been complaints about both its performance and its ability to deal with the amount of new claims it is asked to deal with every day.

Claims Management Companies (CMCs) have also seen their workload increase, as more and more publicity about mis-sold PPI appears in the media, and an increasing number of borrowers who believe that they were mis-sold PPI are turning to them for advice in claiming back money which has been falsely taken from them.  Banks, building societies and other financial institutions have all criticised CMCs for their aggressive marketing, but the people who mis-sold PPI in the first place are only trying to protect themselves from more expensive litigation.  All cases will have different levels of complexity.  Anyone who believes they have been mis-sold PPI should think carefully about their options.  It is naturally easier to try to solve the dispute with a bank or other lender, but this is sometimes not possible.  The man in the street may not have the time or inclination for this, and it is worth enquiring with a reputable CMC about the best options.

Are you entitled to pursue a complaint for PPI mis-selling on behalf of your deceased?

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Banks charge customers Payment Protection Insurance (PPI) in case of default on bank products, such as mortgages, loans and credit cards.  Usually, this is in case a person is made redundant from employment and cannot maintain the repayments.  The insurance then covers the repayment amounts.

Depending on the bank, Payment Protection Insurance (PPI) terms and conditions may vary.  Criteria are set for PPI compensation payout eligibility in the event of PPI claims.  Media reports have highlighted cases of mis-sold PPI and those customers affected have been encouraged to reclaim insurance payments they have made.

The coverage given to PPI and the banks’ selling practices has led to a surge of claims for PPI mis-selling.

The Financial Services Authority (FSA) and the Financial Ombudsman Service (FOS) have handled rising PPI mis-selling complaints.  How the payment protection insurance was sold to a customer, the customer’s status and needs at the time, and the terms and conditions of the insurance policy are all taken into consideration in conclusion of the case.

A common question that arises is whether or not someone who was mis-sold PPI, and subsequently died, may have their PPI compensation claimed by someone else.  Benefits paid out by the insurance policy may hinge on a range of factors or eligibility criteria.  A claim may only be successful if the criteria of the PPI policy are met.  PPI policies may be in a person’s sole name, or joint names, and could limit policy benefit payouts.

Some people were sold PPI cover and were in fact, by their status, ineligible for PPI payouts.  Claims for PPI mis-selling have increased.  Self-employed people are not made redundant and service pensions often include payments in the event of redundancy, and therefore do not require PPI cover.

Family or relatives of a deceased person may have assessed PPI as part of the concluding of financial affairs relating to the death of the loved one.  This may have brought to light PPI mis-selling and the need to make enquiries about the eligibility for reclaim.  A person may make a PPI claim on behalf of the deceased as long as the necessary PPI policy documentation, and a death certificate, is provided.  PPI claims are assessed on a case-by-case basis.

The avenue to claim PPI mis-selling is open to all, however, not all may be successful in their claim.  Making sure that all of the PPI records can be produced as part of the claim is very important, as without these documents it may not be possible to prove the case.

Should an evaluation of a bank’s assessment for PPI show that a deceased person was not actually eligible for PPI cover, mis-selling may have occurred.  Proving this after a six year period may be a challenge as banks may dispose of documents after six years, particularly if the circumstances of the sale of PPI are lost.

Information about the deceased’s financial records may be accessed through Freedom of Information Act, however access may be given under specific criteria only, and records may not contain adequate information  for a reclaim of PPI.

Who is to blame for the influx of mis-sold PPI claims?

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Although the vast majority of claims against the mis-selling of Payment Protection Insurance (PPI) are genuine, and the majority of those have been successful, Antonio Horta-Osario, the chief executive of Lloyds bank, has claimed that one in four of the claims for PPI mis-selling are from claimants who never had a PPI policy.

The PPI scandal came to light in 2008, when it emerged that salespeople from financial institutions such as banks, building societies and credit card companies were selling policies to people who either didn’t need them or would not be able to claim if they fell ill or became unemployed.  But thanks to consumer groups taking test cases to the courts, thousands of people in the UK have successfully claimed a share of the estimated £9 billion that UK lenders together have set aside to settle these claims.

As the publicity has grown about this mis-selling and the possibility for borrowers to reclaim PPI, so the number of companies offering to help people with PPI compensation has grown.  But at the same time, so has the number of false claimants.

While there may be a few claimants who know they are merely trying it on, who have never had a PPI policy, the Claims Standard Council believes that banks collectively are trying to put the blame onto these unfair complainants, while ignoring those with genuine complaints of PPI mis-selling.  They argue that, quite rightly, customers still have a mistrust of banks that have mis-sold them PPI in the past.  If there are customers who have been victims of mis-selling PPI, they are entitled to have their claims heard fairly, and these claims should not be influenced by those who see the banks’ allocation of £9bn as easy money to be had through their false claims.

But clearly, the blame for the influx of mis-sold PPI claims must be placed firmly at the feet of the banks and building societies.  In the first place, their salespeople were not trained to treat their customers with the respect they deserved.  Rather, they were motivated solely by commission payments.  Just as any other salesman will try to convince customers about add-ons for a new car, for instance, so the financial and credit salespeople were keen to earn a commission for PPI.

Thankfully for everyone, the practice of mis-sold PPI has been exposed, and the people responsible should know, with so much ongoing publicity, that they cannot get away with it anymore.  Meanwhile, the PPI compensation train trundles on, with around 2,500 new complaints every day to the Financial Ombudsman Service.  It is to be hoped that all the spurious complainants, who are making claims for PPIs that never existed, should not be allowed to stand in the way, or slow down the process, for those with genuine claims against their lenders if they believe that they have a real claim for PPI compensation.

Why are so many people entitled to claim PPI compensation?

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Payment Protection Insurance (PPI), regardless of the recent bad publicity, is actually a very good idea in principle and may be an ideal product for many borrowers who need it.  People who take out a loan or any other type of credit agreement may become ill or lose their jobs during the term of the loan, and these people would then be covered by PPI.  But many other borrowers may have been mis-sold PPI because they were not informed at the time that they took out their loan that it was not mandatory, or even that they may not have been eligible for protection.

The person who sold them the loan was on commission, therefore they would have wanted to sell them as much of their products as they could at the time they took out the loan agreement. By telling them that “of course, we’ll add in the PPI,” or something similar, they may have been led to believe that this was mandatory.  However, since the PPI mis-selling scandal was exposed in 2008, and the Competition Commission’s new rulings came into force this year, thousands of people have realised that they were mis-sold PPI cover.

There are some major ways in which PPI was mis-sold in the last ten years.  The most common method of mis-selling was by salespeople neglecting, or wilfully avoiding telling customers that PPI would be added to their monthly payments.  Anyone who was sold a single-premium policy would have suffered even more, because they would not only be paying for the cover in the first place, but paying interest on it as well.  No wonder so many people were outraged when the scale of this misspelling was disclosed.

It has now appeared that PPI compensation is due not only to people who were mis-sold the cover on a loan or mortgage, but also on other financial products, such as hire purchase, credit cards, store cards or even for nursing home fees.

One of the most galling aspects of the business is when people who took out PPI and knew exactly what it was find in the end that the policy does not cover them when they need to claim on it, and are not entitled to a payout.  It is most satisfying of all for these people when they find that they can reclaim PPI.  Remember, it is not just the cost of the payments on the policy that can be reclaimed, but the interest that could have been earned with that money.

Many of us are confused or baffled by financial arrangements, and it is precisely this that the salespeople who are responsible used to their advantage when they mis-sold PPI.  Now that so many people realise that they are entitled to PPI compensation it is to be hoped that this kind of mis-selling has finally been stopped.

What do we need to do to reclaim PPI?

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Although it is welcomed that banks and building societies have held their hands up to mis-selling Payment Protection Insurance (PPI), there are still anomalies in recent requirements from the Financial Services Authority (FSA) that mean that borrowers who are still owed money may not realise this.  The lenders have been told to contact by letter customers who they think may have been mis-sold PPI.  Even so, those who are not informed can still claim, because it is only those who have been mis-sold PPI because of the lender’s systematic failing who will be notified.

There are many borrowers who believe they have been mis-sold PPI who will feel that this is the end of the line.  But this is not always the case.  The Financial Ombudsman Service exists to mediate between customers and lenders who cannot resolve their issues.  But if the ombudsman rejects your complaint you will not be able to receive compensation, and your bank has won.  In this case, professional help is the best option.

Many people will be unaware if they were mis-sold PPI, because of the way the salesman; either face to face or on the telephone, has followed the script.  It was often the case that PPI was mis-sold simply by leading borrowers to believe that it was mandatory.  By checking their statements, which should be itemized, customers can easily check whether they have taken out PPI.  If it is the case where they were unaware that it was not a necessary part of the loan agreement, but merely an add-on, then they have grounds to reclaim PPI.  If they think that they were mis-sold PPI, even if they had agreed to take it out, but their circumstances at the time that they took out the loan meant that they would not be entitled to any payout under the cover, then they have a good reason to claim for PPI compensation.

There are many websites from where people can download a template letter designed to help them reclaim PPI, but as all cases differ in their levels of complexity, this may not be the best case.  Although it may be the answer to your problems when people first look at it, it is not considering their unique position.  As time has gone on and lenders have been told by the FSA to review a huge number of cases, customers could still have a chance of a successful claim for PPI compensation if they find that they are entitled to claim again.

Claims Management Companies exist to help borrowers through the process.  It will be daunting to almost everyone who is not involved in the financial industry.  With a guarantee of no fees if people’s claim for PPI compensation fails, they have little to lose but a couple of hours of their time by seeking professional and experienced advice.

What is mis-sold PPI?

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Payment Protection Insurance (PPI) is a financial product designed to safeguard anyone taking out a loan or other credit agreement against falling ill or losing their income.  Borrowers could be assured that the insurance would cover their payments on the loan or mortgage if this happened.  While this was a good and sensible product for most people to purchase along with their loan, the scandal that broke in 2008 showed that many people had been paying unnecessarily for the product.

Those who were unemployed, self-employed or retired were not covered under the small print of PPIs, and became eligible to claim PPI compensation.  As a result of pressure selling, or simply not informing customers of their options, the sale of these PPIs was deemed to be mis selling, and that is why thousands of people In the UK have been able to successfully reclaim PPI.  For instance, many of these customers were led to believe that taking out PPI was part of the process of taking out the loan or credit agreement, making customers think that they had no choice in the matter.  What they should have said, to save their employers having to put aside around £9bn, is that the PPI was not mandatory, and if customers did want to pay for the insurance, it was available elsewhere.  As the salespeople were obviously on commission, the selling of PPI was part of their job, although not in the borrower’s best interests, especially as they may not have been eligible to claim on it anyway.

The simple fact is that, although many people would have wanted and also benefited from taking out this insurance cover, many people were mis-sold PPI.  In this case, and due to the massive publicity, thousands of people are claiming against the mis-selling of PPI.  The Financial Ombudsman Service, which mediates on behalf of the public when a dispute between a financial organisation and a borrower cannot be resolved, is receiving around 2,500 complaints or enquiries every day.  This has naturally put pressure on the ombudsman’s office, as many people believe that they were mis-sold PPI and feel they can handle the process on their own.  But it is often more complicated than aggrieved borrowers may think, so specialist help is often necessary.

There are organisations that provide a template letter to send to their lender for borrowers who feel they have been mis-sold PPI, but as every case varies, these may not be sufficient to help every borrower who feels that they have a case.  A reputable claims management company can help to guide anyone who feels they have been mis-sold PPI in the past.

Hopefully, all banks, building societies and other lenders will have learnt from the whole PPI mis-selling scandal and treat their customers with the respect they deserve.  Otherwise, they will just have to keep paying out more money in PPI compensation.

Top ten institutions accused of mis-selling PPI plans

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And the winner is … Barclays.  Or the biggest loser, depending on how one looks at it.  One of the High Street’s longest-established financial institutions was also the one that most people complained about in the second half of 2011.  Around 12,000 complaints were brought against the bank by its own customers, with a massive 99% of these being successful.  This is the same percentage of successful cases brought against Lloyds and MBNA Europe Bank.

While an average of 72% of all complaints were upheld by the Financial Ombudsman Service across Britain’s banks and other lenders, complainants were successful in 84% of those cases brought against Barclays.  The company has admitted that PPI claims were responsible for a 67% rise in complaints against it.

Lloyds had been a clear leader in the first six months of 2011, with the most complaints about its services, but was pushed into third place by Barclays, with MBNA in second.  Across the industry, complaints against banks continued to rise.  Complaints regarding mortgages rose by 38% to 5,202, complaints about insurance increased by 22% to 14,000 while cases involving credit cards were up by 9%, reaching almost 29,000.

After consumer pressure, it emerged that banks had been systematically mis-selling PPI to customers, either face to face or over the telephone, for a number of years, and it was viewed within the industry as standard practice.  The lenders were either deliberately not informing their customers correctly about whether taking out PPI was mandatory, whether it could be purchased elsewhere, or selling it to customers who would not be able to claim on the policy.

When it comes to complaints about mis-sold PPI, there are a couple of disparities.  The majority of High Street lenders were unsuccessful in, on average, more than 95% of cases, but Nationwide and Capital One were found to be liable for PPI compensation in only 7% and 11% of cases respectively, despite receiving around the same number of complaints against them.

It emerged that more than £2 billion was paid by all the banks combined in 2011 over PPI mis-selling.  The headline figures have made so much publicity that it has encouraged more and more people to try to find out whether they can reclaim PPI, with banks setting aside an estimated £7.5 billion to cover the expected compensation.

The top ten banks, in order of PPI complaints against them, were:

  • Barclays, with 6,975 complaints, of which 99% were upheld
  • MBNA Europe Bank, 5,377 complaints, 99% upheld
  • Capital One (Europe) 5,057 complaints, 11% upheld
  • Black Horse, 4,999 complaints, 98% upheld
  • Lloyds TSB, 4,257 complaints, 99% upheld
  • HSBC, 2,813 complaints, 87% upheld
  • Bank of Scotland, 1,954 complaints, 98% upheld
  • Nationwide, 1,778 complaints, 7% upheld
  • Clydesdale Bank, 1,336 complaints, 57% upheld
  • HFC Bank, 1,078 complaints, 93% upheld

It is clear from the figures that all lenders have been found to have mis-sold PPI.  It makes sense for anyone who has ever had any kind of loan to see if they are owed PPI compensation.

Top five PPI myths revealed

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Despite the thousands of successful Payment Protection Insurance (PPI) claims since 2008, and the massive publicity that these have generated, there are still many myths circulating about the whole process of PPI mis-selling and its results.

One of the top five myths that people have about mis-sold PPI is that it is not worth the hassle and stress of going through the process.  But this is almost always not the case, as the thousands of successful claimants will tell you.  With no obligation, a company like http://www.reclaimyourmoney.com can tell borrowers whether they have a claim, whether it is worth pursuing, and how much compensation they can expect to receive.  So the stress and hassle exists only in people’s minds.  One wouldn’t expect to service one’s car, put a new roof on their house or perform any other professional service, so claimants should leave all the bother to PPI experts who can advise them professionally.

Many people are concerned that they have not kept the relevant paperwork.  After all, bank or other financial statements are thought to be of no use and, if they have not been stuffed in a drawer, they have been shredded and disposed of.  But your bank or other lender is obliged to provide you with any information relating to personal loans or mortgages.  Many successful PPI claims have resulted in success for the borrower without the need for old statements.

There are many unsubstantiated rumours about the financial information that is kept about people by companies, and these have multiplied since the beginning of the PPI mis-selling scandal.  Why, or indeed how, could anyone have collated all this information from the many lenders in the UK?  Unscrupulous cold callers will try to tell people that their name is on a database, that they have information about them, and that they are guaranteed a payout.  Reputable companies never cold call.

Thanks to the clever scripts of PPI sales people, many borrowers who took out the insurance are under the impression that, as they agreed to the PPI policy they cannot claim, as they were aware of it at the time.  However, most of them will have been unaware at the time of signing that the policy was not obligatory.  These people will be able to claim PPI compensation.

Another rumour in circulation is that going through the process to reclaim PPI will affect the claimant’s credit rating.  This is, of course, untrue.  A person’s credit rating has nothing to do with anybody else, and there is no shadowy organisation monitoring everything that one does. A person’s credit rating is only to do with your borrowings, not with claims against mis-selling.

A reputable company that specialises in PPI compensation will be able to clear up these top five myths, and any others that may have circulated.  They will also be able to advise borrowers of their best course of action and how much money they may have thrown away in the past through being mis-sold PPI.

Should it be easier to claim for mis-sold PPI?

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Thousands of people in the UK have successfully claimed against mis-sold Payment Protection Insurance (PPI) since test cases in 2008 led to changes in regulations.  But while people are able to download template letters to send to their lenders when claiming PPI compensation, the government has done little to help customers with the process.

Anyone who has had to go cap in hand to a bank for a loan will naturally only be thinking if his or her request has been accepted.  They can then be led down the path of taking out PPI that may be either unnecessary or next to useless.  It only came to light after many years of mis-selling that banks and other lenders were getting their customers to pay for products that were not fit for purpose.  Lenders’ salespeople are experienced in making as much commission as they can from every customer, so it is natural for them to use techniques that will earn themselves more on each deal.

As there are thousands of cases which have already been settled successfully, it would seem that the government could have done more to help people who have genuine grievances, but do not possess the knowledge or experience of PPI mis-selling to help them pursue their claim.  Most people have enough to do in their lives, apart from learning the language of financial documents and financial litigation.

Just as one would take their car to the local garage to be serviced by professionals, so anyone with a reason to believe that they have been mis-sold PPI should look to seek the services of a Claims Management Company.  These are professional people who take their job seriously, who are experienced in the area and will act in the best interests of their clients.  They will, of course, expect a fee if they take on your claim and it is successful, but it is not reasonable to expect anyone to work for nothing.  At the same time, if they take on your claim and it is not successful, you have nothing to pay, so nothing to lose.  Recent rulings from the financial authorities have forced the banks to write to customers whom they believe to have been mis-sold PPI.  Not only that, but those claimants whose claims were rejected in the past can now claim again, and many of these have been successful in their claims about mis-sold PPI.

So while the government’s Financial Ombudsman’s Service is overwhelmed with 2,500 cases every day which could not be resolved between the borrower and the lender, it is not advertising any practical help for the thousands of people who want to reclaim PPI.  The most sensible option for people who think they have been mis-sold PPI is to seek professional advice.  Until the government makes moves to help the thousands of genuine complainants who feel they have been victims of PPI mis-selling, the best option is to consult experienced professionals whose daily job is PPI compensation.

Mortgages and PPI

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While most publicity about Payment Protection Insurance (PPI) has concerned loans and credit card agreements, there has been an enormous payout for those who were mis-sold PPI with their mortgages.  It is estimated that banks and building societies will pay back around £60 million to customers who are entitled to claim PPI compensation in this area of the mis-selling scandal.

It is estimated that around two million mortgages have had PPI taken out on them.  While some of these may have been taken out legitimately, with the borrowers being fully aware of their options, many people who were mis-sold these policies have successfully been able to reclaim PPI.

Following a series of discussions between the Financial Services Authority and lenders, new measures were announced which were intended to protect borrowers’ rights.  Lenders will now be obliged to give a refund on any premium increases for borrowers whose policies were recently altered.  Borrowers must be fully informed of any increases in premiums and have these increases refunded if they have not been told.  The FSA also said that any company that had sold PPI would have to review almost 200,000 claims that they had received and rejected.  The FSA’s managing director, Jon Pain, said: “The FSA welcomes this positive move by MPPI firms to reverse recent changes in premiums or cover which will put affected customers back in the position they were in before the policy was changed.  It will also give all MPPI customers clarity about when and why firms will be able to vary these in future.”

The chairman of the Financial Services Consumer Panel, Adam Philips, added: “It cannot be right that firms change the terms and conditions of an insurance policy just as times get hard and when people are more likely to try to claim on it.

“We note that this agreement is to freeze premiums and cover for existing customers until at least January 2010. We will be watching to see how the FSA ensures MPPI customers continue to get a fair deal beyond this date. Significant changes to cover go against the whole principle of why people pay for insurance and undermine consumers’ trust in the industry.”

As has been seen in other areas of borrowing, pressure selling has been used, along with other mis-selling methods, to lead mortgage borrowers to believe that taking out PPI was either an obligatory part of the deal, or could only be obtained from the lender.  These are two of the main areas where lenders have had to give PPI compensation to borrowers who have been mis-sold PPI.

The PPI compensation could be much more on a mortgage than on other forms of loan, because of the longer term of a mortgage.  Anyone who thinks they may have been mis-sold PPI on their mortgage should think seriously about looking into ways to reclaim PPI.  Most people are trusting and therefore have little experience of financial matters, especially when it comes to the small print, and this is where expert guidance from a specialist Claims Management Company is invaluable.  Using their experience could be the difference between reclaiming thousands that the borrower is owed and nothing at all.