Banks have to pay around £4.5 billion in compensation to millions of customers for misselling payment protection insurance (PPI), but how do you know if you have a claim?
Payment protection insurance or PPI was sold by banks with loans and credit cards to let borrowers keep up the repayments if they lost their job or were unable to work due to sickness or injury
How many policies were sold?
Banks sold around 16 million policies since 2005.
What was the court case about?
City regulator the Financial Services Authority ordered the banks to pay compensation after a deluge of complaints – about 1.5 million claimed they were sold policies that would never pay out.
The banks argued the FSA was unfair making them pay compensation but lost the case in the High Court.
What happens next?
The banks have to pay out compensation – unless they can find legal grounds to appeal the verdict.
How do I know if I have PPI?
Check your credit card, loan agreement or bank statements. They should show a one-off payment added to your borrowing or a monthly PPI payment.
Customers who had no chance of claiming included the unemployed, self-employed, retired or disabled. Many customers were wrongly told PPI was a condition of the borrowing or compulsory without the option of turning down cover.
How much compensation should I expect?
Compensation should pay back any premiums plus interest. If you made a one off payment against a loan, then your borrowing should reduce. Complaints upheld by the Financial ombudsman have received pay outs between £2,750 and £44,000.
How do I complain?
Get in touch with the lender who sold the insurance and ask for compensation. if they delay or reject your claim, contact the Financial Ombudsman.