PPI mis-selling victims in line for compensation

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Consumers who have been mis-sold loan insurance could be in line for a payout after a judge ruled against UK banks in a landmark case.

The British Bankers' Association had called for a judicial review after the industry regulator, the Financial Services Authority, decided banks should compensate anyone who was previously mis-sold payment protection insurance.

What is PPI?

Payment protection insurance is taken out to cover repayments of loans should you fall ill or find yourself out of work.

Banks have already paid compensation to thousands of people who contacted them to complain about mis-selling.

But last year the FSA published guidelines stating banks should contact all past PPI customers and give them the option to complain if they thought they had been mis-sold PPI. Banks disagreed with this and launched the judicial review.

However, the High Court ruled against the banks, meaning billions of pounds could now be paid out. Andrew Hagger, spokesperson for Moneynet, suggests this could cost banks between £2 billion and £3 billion, while some reports claim it could be as much as £4.5 billion.

The BBA says it is disappointed with the result but is considering appealing. It has 21 days to do so.

Spokesman Richard Herridge says: "While the UK banking industry has to date implemented every reform on PPI sales and complaints handling required by the regulators, the additional requirements in the policy statement effectively apply new standards to past sales, which we believe go beyond the rules and regulatory requirements which were developed by the regulator over time."

How to tell if you were mis-sold PPI

Today's ruling is set to open a floodgate for possible claims. So how do you know if you were mis-sold?

* Was it made clear to you that the PPI was optional?

If you feel you were forced to take out cover then you could have been mis-sold.

* Was it explained to you that past medical conditions mean you are not fully covered?

Many policies do not cover existing medical problem so if you have to be off work due to an existing problem your PPI may not pay out.

* Were you unemployed at the time you took out the PPI?

Most PPI policies include unemployment cover. If you were unemployed or retired at the time then this cover is of no use to you.

If you believe you were mis-sold PPI first contact your provider explaining your case. Failing that you can go through the Financial Ombudsman Service. Go to financial-ombudsman.org.uk and fill out the necessary form.

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Your Comments

Lloyds TSB May Delay PPI Claims Further | http://t.co/aR2PBZt

Iwas sold ppi for a car loan by Auto Direct Finance through Yes Car Credit in 2003.Iwas charged almost double the dispayed car price as the PPI had its own interest as well as the loan interest . I paid all in full without missing any monthly installments .When Iclaimed back the PPI,Iwas informed that this company was regulated by the Consumer Credit Act 1974 at that time .and my claim was not successful.Can I lodge another claim . on our agreement it is clearly documented that they are regulated but they totally denied this when i made my claim

If you find you were sold PPI and you value the product there are still ways to save money; there are now independent suppliers around who often charge far less(for instance http://www.britishinsurance.com or just type in "payment protection" in google. With some providers you can transfer, meaning you don't need to go through the initial exclusion on unemployment again. If you want to transfer, they do ask for no break in cover though, so make sure you get a new policy before you cancel the old one

If you have payment protection and you want to continue to be covered you can still save money. There are now some independent providers who can be far cheaper ( just type in "payment protection" in Google or go to British Insurance)
If you transfer cover from another policy, with some you don't need to go through the initial exclusion period for unemployment cover again but they normally do insist that there is no break in cover so buy first, then cancel your old policy.