Payment protection insurance (PPI) is often sold to consumers when they’re taking out a credit card, store card, loan or mortgage. The insurance – sometimes referred to as loan protection insurance – is designed to pay your debts if you’re unable to work due to illness or injury, or if you’ve been made redundant.
According to research by the Financial Services Authority and the Office of Fair Trading, tens of thousands of PPI policies have been mis-sold in the UK, leading to consumers spending money on insurance they either didn’t need or could never claim on.
Can I make a claim?
To find out if you can claim back PPI, you must first make sure you were mis-sold it. Policy details will usually be on the paperwork sent to you at the time you took out your loan, credit card, mortgage or finance agreement – if you’re still unsure, contact your lender or finance provider.
You can make a claim if:
- You didn’t realise you were taking out the policy at the time
- The policy wasn’t properly explained to you either before or at the time you took out the insurance
- You weren’t told that the insurance was optional
- You were led to believe your application for credit would be rejected if you did not take out the insurance
- It wasn’t made clear the policy premium would be paid upfront as a single premium and would be added to your debt
- Exclusions to the policy, including medical conditions, age restrictions and employment status, were not explained to you
- It wasn’t made clear that the policy is set to expire before your loan or credit agreement ends
How to make a claim
To make a claim you can write a letter of complaint to the lender or finance provider who mis-sold you the PPI. Alternatively, you could use a claims management company, who will take a percentage of the compensation you receive.
If they do not respond to your letter of complaint, you should contact the Financial Ombudsman Service for further advice.