Claim money lost on payment protection

Mon, 03 Mar 2008

There are many companies that promise they can claim compensation on a no-win no-fee basis for people that have been missold payment protection insurance (PPI).

What these companies do not say is how much they charge for their efforts, usually 25 per cent plus. What people do not realise is that they can do this themselves by contacting the Financial Services Ombudsman Service who uphold the majority of PPI compensation claims .

Its definitely worth making a claim as a personal loan of £7,500 could have a PPI element of approximately £3,000.

The point of PPI is to cover loan repayments if a person looses their job or can’t work through illness. These policies have often been sold to borrowers without being properly explained and are often poor value for money. The past few years has seen companies profit from the sale of PPI policies. The Financial Services Authority (FSA) last month fined HFC bank £1m for not giving adequate advice to customers being sold the insurance .

Companies are taking advantage of the growing PPI backlash as consumers become more aware. One such company called Claim2Gain were set up to chase claims against missold endowment policies, but PPI is now the biggest issue.

Matthew Whiting, Claim2Gain director said, "There is still a remarkable amount of confusion about mis-sold loans insurance." Many inquiries the company deals with come from people who are unsure if they have even bought insurance. It isn’t surprising then that banks and loan companies find different ways to hide the fact that people are buying PPI policies.

On average borrowers are claiming £3,000 and payouts are between £125 and £21,000.

According to the Financial Ombudsman Service, borrowers do not need to use such companies. The ombudsman is a free service and PPI claims is a common complaint to them. Emma Parker from the ombudsman’s office said, "PPI is really out of step with other complaints."

If a complaint is upheld, the borrower gets a refund on premiums paid and the loan is recalculated and it may also include a payment for distress caused.

Parker added that some cases are clear-cut in situations where the policy was sold to consumers who could never claim. However it is difficult to prove what was said at the time of sale. Lenders and insureres cannot use their general guidelines as a defence.

Good grounds for a complaint are if a consumer was not given a full description of the policy or if it was later found to be totally unsuitable for their needs.

Anyone who has been sold a PPI policy in the last six years may have grounds for a claim. Over six years and the claim can only be pursued with original paperwork.

The success of a claim depends on how the policy was sold so check if the terms and conditions were given and a cooling off period. The paperwork may be sound but a claim can still be successful if the consumer could never have claimed on the policy.

Put your claim to the company in writing asking for a refund on premiums. For further information visit the FSA website: financial-ombudsman.org.uk.
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