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PPI – What’s Changed?

The mis-selling of payment protection insurance (PPI) is a scandal that has rocked the British banking industry and is continuing to do so.

 Change

Just when the banks and financial companies thought it was a nightmare that was going away, it would come back to haunt them. The most recent twist has been the Plevin court case leading to compensation being paid out when commission paid was more than 50% of the cost of the loan, but the customer was not told.

It begs the question - has anything really changed to stop this kind of mis-selling from happening again?

Change 1 - Financial Conduct Authority

The banking regulator at the time the scandal broke was the Financial Service Authority (FSA). Although it could make recommendations and lobby banks and lenders about changing behaviour, it had no enforcement powers to force through change.

The Financial Conduct Authority (FCA) replaced the FSA on 1st April 2013 and has been described as "the FSA, but with teeth". In terms of banks, the FCA can and will …

  • Ensure that customers are treated fairly
  • Encourage innovation in the banking and financial sector, as well as healthy competition
  • Identify potential risks within the industry, and take necessary action

It also has minimum standards that banks have to meet in many different areas, including customer service and so on.

Change 2 - 7-day window

PPI was sold to customers at a time that was considered to be highly emotional. For example, securing a loan to be able to buy a better family car, or for a mortgage and so on.

People do not borrow money for the sake of it but do so to be able to improve their lives, homes etc. Being told - or given the impression - that their application was more likely to be successful if they bought PPI was playing on people's emotions.

Now, customers must be given time after they have bought the loan etc. before being offered any additional products. In most cases, this has to be a minimum of 7 days, although there are suggestions that 14 days is a better length of time.

Change 3 - No single premium policies

The selling of single premium policies, where the customer paid for the policy in one lump sum - or, more accurately, the lump sum was added upfront to the loan - has now ended. If a bank or anyone tried to sell you PPI in this way, you can remind them that this is no longer acceptable.

Change 4 - Publish pay out rates

If you knew that lengthy process involved in claiming on PPI was as it was and that at the end of it, you were unlikely to make a successful claim, would you have bought it?

Banks, if they continue to sell PPI and other insurance products, they must tell the customer what the successful pay out rate is on it. This is to help the customer make a better purchasing decision.

But, if you think you have been mis-sold PPI, please call Payment Protection Scotland - we know we can help you!

Pros and Cons of PPI

There are many insurance products you can buy to protect you, your finances, your home and your family from the worst that life can throw at them.

 Pros and Cons

In many ways, insurances are a shrewd financial move and so it comes as no surprise that so many customers were taking in by the mis-selling of payment protection insurance (PPI). In effect, you thought you were buying an insurance product that would protect your debt if you were unable to make repayments due to ill health and so on.

But it wasn't quite that simple. Customers were sold a product that was expensive but, worst still, was one that didn't cover you.

Mis-selling - what is it?

PPI may have been an OK product for some people but the way in which it was sold to customers is the problem that is now leading to millions of customers claiming their money back.

Customers were not given the full facts about the policy. For example, customers were told it was compulsory when it wasn't.

There is also the question of commission. A recent ruling now means that you could be entitled to more compensation if you were not told that the commission paid to the broker was more than 50% the cost of the policy.

Was PPI Any Good?

This has led to the fact that the product itself has taken a bashing in terms of its reputation which begs the question, are there actually any pros to buying PPI or not?

Pros

  • The whole purpose of a PPI type policy is to ease repayment problems in the event a policy holder - YOU - are unable to make repayments on loans, credit cards or whichever product the policy is applied to.  
  • If you think that your employment may not be stable or that there are very little additional employer benefits to you, then PPI is worth considering (although some experts suggest that other policies may be more suitable - always seem independent financial advice before taking out any policy of this nature)
  • If your debts are bigger than any savings or assets you have, then PPI is a prudent move to cover your income. If you are unable to meet repayments, debts can soon spiral out of control.

Cons

  • Some policies will only cover a specific debt such as the PPI policies that many of PPI Scotland's customers were mis-sold and some people say, this makes it an expensive policy for the narrow cover it offers.
  • Some policies have a 'waiting period' and cannot be activated immediately if you are made redundant; e.g. you may have find 3 months' worth of repayments to make before the PPI policy kicks in.
  • Some PPI policies also only pay out for a short period time
  • If you are self-employed or retired, you will need to check terms and conditions carefully as many policies are specific with regard to employment and types of income.
  • Check terms and conditions thoroughly - some medical conditions are excluded, such as stress, pregnancy issues, depression etc. and some pre-existing medical conditions are also excluded.

If you think you were mis-sold PPI, then Payment Protection Scotland can help you claim your money back - so call us!

The Rise of PPI Compensation Claims

And they are not stopping any time soon!

We have all heard about payment protection insurance - commonly abbreviated to PPI - and the fact that it was an insurance policy that was mis-sold to thousands of people across Britain. The scale of the mis-selling has caught everybody by surprise but, how did it all start?

Rise

It started in the 1990s

Consumer organisations started to raise concerns and questions over the how and why PPI was being sold to customers.

As part of this pressure, the financial regulatory authorities started to look in to how banks were selling this product to people too but, these reviews and investigations took time, years in fact.

It was also raised in Parliament about the expensive product and why it was being sold alongside loans and credit cards and so on. Banks said the law was grey in this area, but others said the law was clear: customers did NOT have to buy anything other product alongside a loan etc.

By the end of the 1990s, not much had happened about PPI. It wasn't until a decade later - in 2007 to be precise - that complaints started regarding PPI, but the numbers were relatively small. It was not until 2010, that the whole mis-selling scandal began to take full effect.

Banks Fighting Back

By 2011, the number of complaints regarding the mis-selling of PPI had reached 1 million but there were two factors that really made the PPI scandal famous all across the UK at this point that combined to create a PPI snowball effect…

I. There was a judicial review in January 2011 brought by the banks that challenged the ruling the PPI premiums should be paid back. The banks lost.

II. This put the PPI mis-selling scandal firmly on the agenda of the nation press and, before the banks knew it, the whole thing was spread across the front pages.

The resulting publicity meant that the 1 million complaints made by the start of 2011 soon mushroomed to over 6 million in 2012.

The number of complaints has continued to ride high, with small fluctuations linked to publicity surrounding PPI and how to make complaints, in order that people can claim their money back - and ALL of their money back, not what the bank thinks it should pay you!

How much could you claim?

Many people often ask this question and of course, until we know the full details of your case we are unable to answer this in full or with certainty but, breaking it down to what has happened thus far…

  • 1 in 11 customers received over £5,000 in PPI compensation
  • 1 in 38 received over £10,000
  • 1 in 99 customers received £15,00 or more
  • 1 in 239 customers received a whopping £20,000 or more

How much could you claim?

Make 2018 the year you claim back your money. But get your skates on because there is a PPI deadline looming…

60% Yet to Make a PPI Compensation Claim

Are YOU one of them?

Everyone has heard of it. Billions of policies were sold to millions of customers. Claiming PPI compensation is relatively 'simple' so why are the majority of people yet to make a claim?

Crowd

Are people unaware they had/have PPI on their credit cards, catalogue accounts, loans and so on?

PPI was mis-sold to customers in many different ways including the policy being added without the account holders consent or knowledge.

In other words, many customers will be unaware that they should be looking for PPI on their accounts, let along making a claim.

Do people assume that the PPI crisis is about everybody else, but not them?

There is also a danger with something as big as the PPI mis-selling scandal that people will assume that it is too good to be true. Add to this the good news stories in the media and across the internet of people claiming back tens of thousands of pounds for all the ingredients to create a situation that feels too good, and too remote.

In other words, customers assume that it is 'too good to be true' and therefore, doesn't affect them because, these things never do.

Did they try to make a claim, only to be told 'no'?

In the very early days of compensation, banks often made derisory offers to customers in terms of compensation and some were told that they did not have a claim. There may also have been instances in which some people were also unable to find out from their bank or lender if they had PPI. Banks were not always keen to give this important information away, but attitudes have changed.

In other words, customers who attempted to claim in the very early days may have been given a raw deal and their compensation attempts thwarted.

Do customers assume their bank or lender would contact them?

Banks and lenders have been told that they should be contacting their customers who they know had PPI and encourage them to make a claim. This does not necessarily mean that the PPI policy was mis-sold to them, however.

In other words, some people may assume that the compensation process is 'automatic'. But it isn't.

Are customers undecided?

Yes, we think many people are undecided, wary and uncertain, even though we are told over and over again that claiming PPI compensation is easy, simple and straightforward. Not everyone understands the process, therefore they are put off claiming. Some people no longer have the paperwork and assume that this rules them out.

In can take commitment and determination but banks and lenders are now listening. You have a right to claim back PPI compensation if the product was mis-sold to you. Don't let the banks get away with it.

Common Concerns About Claiming PPI Compensation

For many people, claiming PPI compensation seems straightforward - you tell the bank you have PPI and ask for compensation.

Concern

But many of our customers share common concerns when it comes to claiming PPI compensation. We take a look at some common issues and problems, as well as offering resolutions.

If I submit a claim and it is thrown out, does this make it a false claim?

There were, and possibly still are, disingenuous PPI compensation claims - that is, people submitting claims knowing that they don't have a PPI policy against which they can claim. Less than reputable claim management companies were also responsible for this in the early days of compensation claims too but thankfully, the profession has now weeded out these companies.

If you make a claim and are not successful, this doesn't constitute a fraudulent claim. And before we make a claim, we always check that you have a PPI policy with the bank or lender.

I am unsure whether to make a claim as I am in arrears with the bank.

The decision is yours to make but, it is important to note that there areno barriers to anyone with a compensation claim for mis-sold PPI from making a caseincluding those customers in arrears or financial difficulties.

It may be that the expense of PPI added to your financial woes, such as the fact that you 50% or more of what you paid for PPI was in commission paid to the person who sold it to you.

If you are in the process of bankruptcy, sequestration or are part of an IVA agreement, you will need to check with our team and your debt advisor as to how a PPI windfall would affect your current financial status.

Can I make a claim for compensation without the need for a claim management company?

Yes, you can. There is nothing stopping you from approaching your bank or lender directly.

People use companies like Payment Protection Scotland for all kinds of reasons, from lack of time to simply preferring someone else to deal with the bank or lender in question.

Will it drag on for a long time?

Straightforward PPI compensation claims should be resolved within 8 to 12 weeks but there are some cases that take more effort to resolve. There is also the case of commission to consider too. If a bank refuses your claim, you can ask the Financial Ombudsman to consider your case, something that we will happy to do.

If you believe you have been mis-sold PPI or would like to check that you have not paid more than 50% in PPI commission, contact our team today to find out more about our fantastic no win, no fee service!

Will 2018 The Year You Claim PPI Compensation?

Time has flown by and with 2017 coming to a close, our attention turns to the festive period and the New Year. But did you know, less than a quarter of people who make a New Year resolution stick to it for longer than a week?

2018

Resolutions are about making changes and sticking to them takes commitment. But there is one resolution you can make that is easy to stick to: claiming PPI compensation.

Recognising what gets in your way when it comes to achieving your resolutions ensures that 2018 is the year that you finally claim back the thousands of pounds that could be owning to you…

PROBLEM 1 -  You are already busy

There doesn't seem to be a spare moment in the day and when you do find five minutes, it is at the tail end of the day when all you want to do is sit down and relax. The thought of wading through paperwork from past loans, credit cards, catalogue accounts, car finance and so on is not a welcome one and so, you put it offer for another day. Except that day never arrives!

The solution

Start small. Locate one batch of paperwork, one at a time and place them in an orderly pile. Or, if you don't have the paperwork, one phone call to PPI Scotland will save you heaps of time as we can do all the 'looking' for you. Just tell us who you know you had loans and credit with and we'll do the rest.

PROBLEM 2 - Tasks need to be prioritised

If you knew that there was a possibility of claiming thousands of pounds of your money back, would you make it a priority? Even though you know that this is a possibility, apathy and having a hundred and one other things to do gets in the way of finding the paperwork or making the phone call to PPI Scotland.

The solution: Decide on a time when you start your claim - and stick to it!

A 20-minute phone call with PPI Scotland is all it takes to turn your 'really must do that' moment into a 'wow! I could be owed money!' moment. As difficult as it may be, spending some time looking into whether you have PPI or not could be time that is rewarded. Compensation claims can range from a few hundred pounds to thousands.

And don't forget, the Financial Conduct Authority have set a deadline of August 2019 for ALL PPI compensation claims.  

Problem 3 - Today Vs. Sometime

There is also the notion of putting something off until the time you feel like doing it, or want to do it and so on. The problem is there is never a right time when it comes to doing somethings - like looking through the paperwork for evidence of PPI on your loan, mortgage and so on…

The solution: call Payment Protection Scotland right now for more information on our no win, no fee service.

Is Claiming PPI Compensation Really as Easy as They Say?

Spend no longer than five minutes searching the web for information relating to PPI compensation claim and you will see a whole host of websites telling you how easy it is to claim back your money.

Easy

But is it that simple?

Most claims are straightforward

There are many, many cases of people claiming back their money with no hassle at all. This as a result of a variety of factors. For example, mis-selling is clear - the bank knew they were self-employed, for example, or over the age of 65 years etc. - and so there is no quibble.

Other claims can be more complex

Despite what various websites say, there are some claims that are more complex and some claims that become a nightmare because the bank or lender don't always follow the rules, so to speak.

Why do some PPI claims become a problem?

There are many reasons but for some people, it can take time and effort to unravel what the issue is;

  • Telephone sales

Many people were sold PPI as an 'add-on' product weeks or possibly months after they bought the original loan. There are rules about how sales can be made to you over the phone, the information that is given to you such as the cancellation period and so on. Some customers felt they weren't given all the information. Banks say that they were but with most phone calls recorded for 'training purposes', there is evidence that can be listened to. But how you interpret the call and the how the bank does can be very different.

  • Advised sales

There was a question mark hanging over what used to make an advised sale and what wasn't. In other words, when the bank was telling you it was the best policy to fit your needs and when they were making suggestions that it may have been the right policy. The rules are much clearer as a result of the PPI scandal - the bank has to advise customers in writing why a policy is the right one.

Who sorts out the PPI compensation mess?

When it comes to issues between the banks and the customer, it is the Financial Ombudsman who sorts out who is right. They also tell the bank how to put it right if it is their fault.

They don't just work on PPI compensation complaints, they work across all kinds of financial products and services. They have taken on hundreds of extra staff to try and get through the PPI complaints as fast as possible.

At one time, customers were given the impression that unless they had 'fresh' evidence, there was not much point taking their PPI complaint to the Ombudsman. But this isn't the case.

Even better news, the Ombudsman is still finding that the customer is right more often than the banks. If your claim has been refused, contact the Ombudsman for information on how to submit your claim to them. Or contact our expert team!

PPI Jargon

Don't know your redress from your alternative redress? Don't be confused by PPI jargon! Use our handy guide to cut through it.

Jargon

Jargon

Explanation

PPI

Payment protection insurance is the name given to the product that has been mis-sold to thousands and thousands of people. It may not always be referred to as PPI on your account. For example, it could be called 'loan care' or 'card protection' etc.

Look for anything that promises to make repayments on the account if you are unable to as this is more than likely PPI.

 

Redress

This is another word for compensation and is the monies that you get back in compensation

 

Monies

A financial term for the settlement or the amount of compensation you receive

 

Single premium policy

Some PPI products were charged at a monthly price, whereas others were sold and the customer paid for it in one lump sum. These are no longer sold in the UK as the issue was that not only was the policy unsuitable for people in many cases, they were also not lasting the length of the loan and, when customers cancelled them, the bank did not reimburse them their money

 

Advised sale

This is where a customer, like you, may have been told - that is, advised - to take out the policy. However, you may not have told explicitly why the product was right for you. Today, when any financial product is sold to you on an advised basis, you must receive a letter that details all the reasons why it is the right policy for you.

 

Alternative redress

This is a common phrase and is used to describe a loophole within the law that some banks are exploiting. Instead of compensating customers the full amount, they are paying back the difference between the cost of their policy and the next cheapest.

*UPDATE banks and lenders are now compensating customers according to the guideline of putting people back to where they would have been financially had they not been sold PPI*

 

Term

This refers to how long your loan lasts for, such as 10 year term or 5 year term. In other words, if you borrow a £10,000 over a 10-year term, by the end of 10 years you will have paid it back.

 

It is important as it has been discovered that some PPI policies fell short of the term of the loan, hence in other words, the PPI stopped covering you in year 8 of the loan, meaning if you wanted to make a claim after this, you would not be able to.

 

Commission

This is a payment made to the broker for arranging from the lender for arranging their financial product for you to buy. It is a widespread practice and a way of getting their product before their competitors, but banks and lenders failed to tell customers how high this commission was. The average commission payment was 67% of the cost of the loan so for every £1,000 you borrowed you paid another £670 on top in commission. Now that you see the figure, it seems ludicrous!

 

 

Can I Claim More PPI Compensation?

The court case brought by Susan Plevin against Paragon Personal Finance Ltd was some years ago but the judgement, and how it affects other customers, has only been decided upon in recent months. The fact that Plevin won the case sent shockwaves through the banking industry who are braced for another wave of PPI compensation claims.

But what is the 'Plevin Case'? And how does the judgement affect you?

Justice1

What Was the Plevin Case All About?

Susan Plevin on taking out a sizeable loan and PPI. In this case, the argument was not centred on the mis-selling of PPI as a product itself but on the amount of commission paid and the fact that this was not disclosed to Susan Plevin.

The court agreed that under the Consumer Credit Act 1974, this made for an unequal relationship between lender and customers. Plevin argued that if she had realised over half of the cost of PPI had been commission for the broker, she would have queried the cost.

How Does Plevin Affect You?

Not everyone who has made a claim will be entitled to more money back.

  • Successful claim - if you have made a successful claim, you probably won't be entitled to any more money back because you should have received everything back in full.
  • Unsuccessful claims - if you made a claim for PPI compensation and didn't get a refund, you may be able to go on and make a separate claim relating to commission. This ruling stands whether PPI was sold to you in the right way or not.

According to the Financial Ombudsman, you may be able to complain about commission if;

  • You took out the credit (loan, credit card etc.) with PPI on orafter6 April 2007
  • You took out the credit with PPIbefore6 April 2007 and it was still running on or after 6 April 2008

How to Claim PPI Compensation for Mis-sold PPI and PPI Commission

If you want to claim compensation for commission and/or mis-sold PPI, you need to:

I. Contact your lender or bank and tell them you believe you have PPI and it was mis-sold to you

II. You need to tell them why you think you are entitled to compensation

III.  You also need to find out how much commission was paid on the sale of PPI to you

IV. If your claim for mis-sold PPI compensation is unsuccessful, your claim for compensation on commission paid could still be successful - the commission needs be more than 50% and you were unaware that commission or this high level of commission had been paid

Of course, you can always call us for help and support in making a PPI compensation. Our teams assess you claim thoroughly, can trace accounts and PPI policies, and they can ensure that you get back everything you are entitled to. Find out more - call us today!

Legal Challenge to PPI August Deadline Unsuccessful

You may recall that a claim management company was attempting to stop the PPI August 2019 deadline of being imposed. Unfortunately, the courts have ruled that there is no case to answer and that by setting a deadline, the Financial Conduct Authority are within their rights.

Justice 2

Why Did the Challenge Happen?

Payment Protection Insurance (PPI) was mis-sold on a huge scale. So much so, that millions of people are now claiming their money back. The product was designed to protect the debt in the event the customer was no longer able to make repayments as a result of the loss of income due to illness, redundancy etc.

Unfortunately, the commission and large profits that the sale of PPI policies offered meant that it was sold to people who didn't want or need it. When this was discovered, the wheels came off with banks and lenders now facing a whopping compensation bill.

But, the writing is on the wall and it seems that it has been firmly etched there: there will be no new compensation claims for mis-sold PPI (sold before 2017) after 11.59pm on Thursday 29th August 2019.

There is no slippage or safety zone with this date and time. Put your compensation claim in by then or face waving goodbye to potentially thousands of pounds of YOUR cash.

A claim management company (not us!) felt that this was unfair. They weren't alone. Experts such as Martin Lewis agreed that it placed the protection of financial industry interests above that of consumers.

But the courts don't agree. They have not awarded the right to appeal against the decision and so unless the wheels come off this particular bus, the deadline is set to stay.

What Does This Mean?

It means that unless the advertising campaign commissioned by the Financial Conduct Authority does reach everyone that it needs to, there are potentially thousands, if not millions of customers who face not claiming their money back.

Many organisations believe that the FCA has underestimated the number of claims yet to be made and that the 64 million PPI policies that they say were sold in the UK is also an underestimate. What people are concerned about is the short amount of time there is for banks and lenders to process what could potentially be a huge number of claims.

If this means the system is swamped, your case could be in it.

As yet, we are still waiting to see what the Court of Appeal rejected the case against the deadline but when we do, we'll let you know.

In the meantime, you really do need to start the ball rolling on your case. If you are yet to make a claim for PPI compensation, start TODAY!