Investigate PPI refunds

11 February 2008

Last week it was revealed that as many as two million payment protection insurance (PPI) policies have been mis-sold to people who are not eligible for cover.

And later this week, the Competition Commission is due to publish the early findings of its investigation into PPI and the way this type of insurance is sold - or mis-sold - to customers.

The good news is that if you have been mis-sold PPI then you could be entitled to a refund.

1 Do I have a valid claim?

If, when you took out your loan or credit card, the cost of the payment protection insurance (PPI) element and how it worked was not properly outlined, if you were told you could only take the loan if it included PPI cover, or - as on some internet application forms - the PPI box was pre-ticked, you may have a case. Also, if you didn't have a job when you were sold the policy or were self-employed, then PPI wasn't relevant to you.

2 Does the type of premium make a difference?

If you have a single premium policy, rather than regular premium, this may also be the foundation for a refund. Earlier this year, the Financial Services Authority (FSA) and PPI lenders agreed that borrowers who had cancelled their single premium policies should be refunded, overturning the previous no-refund policy on these contracts. This means that if you've cancelled a single premium policy for any reason, you can now claim a proportional refund, plus interest.

3 How can I get a refund?

Write to your lender (with a copy of the FSA announcement if it's a single premium policy, which can be found at and ask for a review. If it rejects your request, take the matter to the Financial Ombudsman Service. If you want to check the costs of your policy, ask your lender to send you a breakdown of your account - without paperwork a refund is unlikely. Don't use a third party reclaim company, as it will take a large chunk of any compensation.

4 What are my chances of compensation?

So far, the ombudsman has upheld around 80% of PPI cases, so you stand a good chance if your claim is fair. If it's a mis-selling claim you're entitled to a full refund; if it's a single premium policy you can get your interest repaid. However, if you've already received a payout on your policy you won't be eligible for a refund.


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