The Payment Protection Insurance

The Payment Protection Insurance, PPI, scandal rumbles on. Fact is, most policies have been mis-sold. About 80 per cent of cases that go to the Financial Ombudsman, FOS, go in the clients’ favour. Here’s a quick, can-I-get-a-refund guide for you…

Was It Mis-sold?

Decide whether you were mis-sold the policy. To make a successful PPI claim, you just need to show that you were ‘mis-sold’ the policy – in short, you should not have been sold the policy. Whoever sold the policy has certain responsibilities towards you. They needed to ensure that you understood what you were buying. They should also have made sure it was appropriate for your needs.

As an example, you should have had the exclusions pointed out to you. And, if the policy would be null and void if you had certain pre-existing medical conditions, such as a history of heart trouble, the seller should have checked to see if that was the case.

As another example, if you pointed out that you already had cover via your job but the seller said you should have this PPI anyway, that’s mis-selling. If the seller didn’t ask you any relevant questions, perhaps about how many hours you worked, that could be mis-selling as well if you don’t work enough to qualify.

Did You Understand?

Did they make you understand what you were buying? First things first, did you know exactly what PPI was when you took out the policy? You should have done if you were buying it and the seller had a responsibility to make sure that you did. You should have been aware of what you had to do – pay the premiums etc. You should also have been made aware of what the seller would do in return – if you fell ill, your payments would be covered by the policy etc (at least in theory).

Of course, there is a wider context to this – all of those ‘ifs, buts and maybes’. If you had a pre-existing medical condition, you’d probably not get that payout, and so on. If you had, say, cancer one would expect that you would be excluded if you needed to claim as a result of something relating to that. The seller should have covered those ifs, buts and maybes – in effect, gone over the small print with you – before you took out the policy. You should have known what you were getting yourself into with this policy.

Was It Appropriate?

Did they make sure it was appropriate to your needs? Generally speaking, PPI is a product that should really be sold only to those people who are working, can afford repayments and want PPI just in case they become ill or unemployed and can’t maintain the repayments. So the seller should really make sure you are working when you took out the policy.

Note though that the definition of ‘working’ can vary. Typically, it may be that you are working ‘more than 16 hours per week’. If, or example, you worked less than that and took out a policy, you’ve probably been mis-sold as, in the event of a claim, they would normally not pay out as you did not work 16 hours or more a week. They should have asked you.

If you were self employed, you need to check to see if the PPI covered you and would pay out if you were taken ill, had an accident or your business failed. Often, PPI does not cover the self-employed so if you took out such a policy it’s not appropriate to your needs. The seller should have checked that and not sold PPI to you.

Anything Underhand?

Did they do anything underhand? A common complaint is that the seller stated that you must take out PPI through them to get the mortgage, the loan, the credit card or whatever. According to the Banking Code (replaced in November 2009 by the wider-reaching Lending Code), a lender will not insist that you purchase insurance from them.

Even though the seller may not have actually stated that their PPI was compulsory, you can still pursue a refund using this angle if; it wasn’t stated that the PPI was optional (i.e. the unspoken implication being that it was compulsory); it was implied that your application would be more likely to succeed if you took out the policy; it was suggested that the mortgage, loan or other borrowings would be more costly if you did not agree to the PPI. You could even pursue this line if you felt pressured into agreeing to the PPI against your wishes.

Sometimes, you may have taken out PPI without actually realising it. Not so long ago, some agreements had boxes which you had to tick to opt out of the PPI whereas nowadays you need to tick a box to opt in.

What To Do

Know how to complain. If you have, or have had, PPI, it’s worth complaining. Even if you were happy with it (most likely because it gave you a sense of security and you never put it to the test by claiming on it), have a go anyway. After all, you could get all your money back. Reminder: But, please note, if you have or have had PPI and have received a payout from it, you cannot claim your money back as you can’t say the policy was mis-sold!

The ‘how to’ of reclaiming is fairly simple. To start, you need to get all your paperwork and facts and figures together. Once you know how much you have paid out and have decided why you think you should get your money back, you write to the PPI provider. Ultimately, you can go to the Financial Ombudsman Service who, you’ll recall, favours the clients in 80 per cent of cases. The Financial Ombudsman Service is at

As always, we welcome your feedbacks and comments especially if we can re-use them, anon of course, to benefit other members.