Payment Protection Insurance (PPI) has been sold and added on to loans to cover the repayments of the person who took out the loan if their personal and financial circumstances change such as having to take time off work due to illness, an accident and in some instances unemployment. It has been the case that PPI has been widely mis-sold, with this mis-selling being carried out by not only the bank or provider, but also by third party brokers.
What types of loans was PPI sold on?
Types of loans that PPI has been sold on are Personal loans, secured loans, Point of sale loans (for example for furniture or electrical appliances), Flexible loans, Business loans, Hire-purchase agreements (for example when buying a car or caravan), double glazing, and even on home improvement loans.
Which Lenders Loans Was PPI Sold On?
Bank of Scotland
Royal Bank of Scotland (RBS)
EGG (EGG Loans)
MBNA (MBNA & Virgin loans)
This is not all of the lenders loans that PPI was sold and added on to and if you require any further information on any of the above mentioned lenders or any loan lenders/providers that you have previously taken out then please have a look through our lenders page on this website where we have provided further information on loans that PPI was sold on and which lenders and companies are responsible for the sale of PPI.
How Is Loan PPI Charged And How Much Does It Cost?
Loan PPI is paid for in a few different ways depending on what it was sold with. Loan PPI policies are normally paid for by either a single premium or a regular monthly premium.
Single Premium PPI Policies
Single Premium PPI Policies are an upfront lump-sum premium that are added on to the cost of a loan and is funded by the credit provider advancing the cost of Single Premium Policy PPI to the borrower by taking out an additional interest bearing loan credit that is added to the amount borrowed when the loan is agreed. This arrangement means that the customer pays interest on the whole amount borrowed, which is the initial cost of the loan including the additional amount borrowed to pay for the single-premium PPI.
In many instances Single Premium Loan PPI Policies would not cover borrowers for the whole duration of their loans, and in addition when borrowers had ended their loan agreement early for example if they had paid their loan off in full or the loan was paid off by the borrower taking out a new loan with the lender to replace the old loan, lenders have failed to refund the borrower any of the remaining Single Premium PPI Policies funds that was owed to them.
The Single Premium PPI Policy and interest that accrues on it can work out as a substantial proportion of the overall cost of credit and have now been banned by the Financial Conduct Authority (FCA).
Monthly Premium PPI Policies
Monthly Premium PPI Policies or more commonly referred to as regular premium PPI policies are where a PPI premium is paid on a regular basis, usually monthly. Monthly PPI policies are different to Single Premium PPI Policies because Monthly PPI Policies can generally be cancelled at any time, and you pay a monthly premium for a specified benefit amount. Whereas with Single Premium PPI Policies you can usually cancel the policy within the first 30 days of the policy start date and receive a full refund, but if a Single Premium PPI Policy is cancelled after 30 days then you would only receive a small percentage rebate of the unused premium.
Monthly Premium loan PPI Policies are known to be much better value than Single Premium loan PPI Policies.
How was loan PPI mis-sold?
Payment Protection Insurance (PPI) has been mis-sold to millions of people but the good news is you can claim compensation If you think you’ve been mis-sold loan PPI. PPI was routinely mis-sold and added on to loans by the seller of the PPI by them not being honest or providing the proper or correct information to the customer at the point of sale or addition of the PPI. In a lot of instances PPI was being sold or added on to loans without the seller of the PPI even checking that the PPI was suitable for the customer, that the customer was eligible for the PPI, or whether in fact the customer even required or wanted the PPI. In addition millions of Single Premium Loan PPI Policies were sold or added on to borrower’s loans when they should have been offered the choice to take out Monthly Premium Loan PPI Policies
The most common reasons that loan PPI may have been mis-sold are
You felt under pressure to take the PPI policy in order for your finance to be approved
The policy was added to the finance without your knowledge or approval.
Your employment status made you exempt. For example you may have been self-employed or in receipt of full sick pay from your employer in the event of accident or illness.
You were not explained the terms & conditions and was unaware of the additional cost and possible cancellation fees.
You had a pre-existing medical condition or were registered disabled at the time the policy started.
Your age prevented you from qualifying. For example many people were sold a PPI policy when they were already past retirement age or would have been at any stage during the repayment term.
You had another similar or existing insurance policy. For example life insurance attached to a mortgage.
Sometimes it was incorrectly stated that this insurance improved their chances of getting the loan or that the insurance was mandatory.
Due to the high profitability from PPI sales, staff were targeted on sales of PPI & high commission levels were paid, which is believed to have contributed to the mis-selling of these policies.
PPI is an optional extra and should not be included as a requirement of taking out a loan. Customers also have the right to refuse PPI. In all types of insurance, some claims are accepted and some are rejected. However in the case of PPI the number of rejected claims is high compared to other types of insurance.
For many years consumer support groups and charities such as Citizens Advice (CAB), Which, Martin Lewis of Moneysaving Expert, and The Money Advice Service (set up by the government) campaigned about the problems with Payment Protection Insurance. In September 2005 the Citizens Advice published a report called Protection Racket that gave evidence on the cost and effectiveness of Payment Protection Insurance. The findings in the report showed that PPI premiums paid by CAB clients represented anything from 13 per cent to a staggering 56 per cent of the amount that had been loaned to the client.
Can I Check or Claim For Loan PPI Even If I Do Not Remember Who The Lender Was?
Many people cannot remember the names of the lenders that they have previously taken out their finances with such as loans, mortgages, credit cards, and store cards etc. This is a common problem for people trying to check if they may have had Loan PPI or claim for mis-sold Loan PPI. Due to the amount of time that may have passed since the accounts were last open or the different lenders that customers have taken finances out with over the years it can be difficult for them to recall which exact lenders that they have used.
We have successfully helped many clients in these circumstances to identify who the lenders were that they had taken out their previous finances with, then to check if any PPI had been added to their finances, and then to claim back for any PPI that had been identified on the finances that the client felt had been mis-sold.
There are many ways to check for any PPI that may have been added on to your finances such as checking credit agreements, your credit report, with the lender, and in your older documents that may be stored away in a loft, garage or filing cabinet.
If you are having trouble remembering the names of the companies that you have previously taken out finances with or you are unsure if you have had or do have Loan PPI and are not sure how to proceed then we can assist you to identify your previous lenders and if you may have had PPI added to or sold with any of your finances.
How Much Is a Loan PPI Claim Worth?
If you do have a Loan PPI complaint that is upheld then the PPI lender or provider of the PPI should also correct and pay you back any further losses you have had as a result of PPI such as any arrears charges due to taking the loan. So in effect a successful loan PPI complaint offer should take in to consideration the initial monthly cost of the monthly PPI Policy or the cost of the Single Premium PPI Policy if applicable, any interest that is charged on top of the PPI monthly payments, and any missed payments or arrears charges that may have been charged and have affected the cost of the PPI. Once the amount of PPI owed back as part of a PPI refund is worked out and calculated an additional amount of 8% statutory interest should then be added on to the PPI refund due to make the total amount that is to be paid to the customer for mis-sold PPI.
The 8% statutory interest is for financial loss through being ``deprived`` of money that the customer should have had because the business's mistake or bad advice led them to take out an investment or account that wasn't suitable for them.
Undisclosed Commission on Loan PPI Complaints (Plevin)
The Financial Conduct Authority (FCA) have issued new rules and guidance around the high levels of commission earned by financial providers through the sale of PPI. The new FCA rules and guidance on high commissions have been in effect from 29 August 2017.
Typically a high level of PPI commission is considered to be at least 50% of the total PPI premium paid. The main basis of a PPI commissions or Plevin complaint as it is often referred to as , is that the bank or provider earned a high level of commission from the sale of PPI but did not tell you this when you bought it.
Not everyone who complains about PPI will be affected by the Plevin ruling. If you have already had a full refund of your PPI then there is no need to complain about unfair commission, as you would have already had everything back that you paid for PPI as part of your refund.
However If you have already complained about mis-sold PPI but you didn’t get a refund you might be able to complain about unfair commission if any of the following 2 reasons apply to you
1-You took out the credit the PPI was sold with (for example, a loan or credit card) on or after 6 April 2007;
2-You took out the credit the PPI was sold with before 6 April 2007, and it was still running on or after 6 April 2008.
You will need to ensure that any Loan PPI commission’s complaints are made before 29th August 2019 as you will not be able to complain after this date. Please also note that although there is now a deadline of 29 August 2019 some people will have an earlier deadline to complain about mis-selling of PPI.
When Is The PPI Deadline?
The Financial Conduct Authority (FCA) who regulates the financial services industry in the UK, including banks and other providers have now set a deadline date of 29 August 2019 to complain about PPI. This means that anyone who is wishing to make a claim for mis-sold PPI will need to ensure that they have complained to the lender, bank, or PPI provider by 29 August 2019 and the complaint must be received by the firm you’re complaining to on or before 29 August 2019 or run the risk of not having the PPI complaint considered.
The Financial Conduct Authority (FCA) and Loan PPI Complaints
The Financial Conduct Authority (FCA) regulate the financial sector in the UK and they are responsible for ensuring that markets work well, fairly, competitively and they benefit customers. Most banks, credit card companies, mortgage companies, and building societies in the UK are regulated by the FCA.
The FCA was established on 1 April 2013 and took over from the previous regulator of the financial services sector in the UK, which was the Financial Services Authority (FSA). The FSA had been set up by the UK government under the Financial Services and Markets Act 2000, and they were the single regulator for financial services in the UK since December 2001 until the FSA was abolished and replaced by the FCA in April 2013.
If you have a loan PPI complaint against a lender or provider it is important that you understand the FCA do not investigate individual complaints so you will not be able to contact the FCA with a PPI complaint. If you have a PPI complaint it is best to complain to the company that sold the PPI first and ask them to put things right. All companies that are regulated by the FCA must have a procedure in place for resolving disputes with their customers and respond to you within set deadlines.
All FCA regulated companies are also required to respond in writing to you just to let you know they have received your complaint, they must also respond to your complaint in writing within 8 weeks to provide you with a final response, telling you whether your PPI complaint has been successful or why they need more time to look into it.
If you are not happy with the companies final response, if they reject your complaint, or if you do not hear from them within 8 weeks, then you may be entitled to ask the Financial Ombudsman Service (FOS) to look in to the problem for you and make an unbiased decision.
Remember: You will need to complain about mis-sold Loan PPI to the business by 29 August 2019 which is the PPI Claims Deadline. Other time limits might apply, so if you think that you have got a Loan PPI complaint, act as soon as possible.
The Financial Ombudsman Service (FOS) and Loan PPI Complaints
The Financial Ombudsman Service (FOS) was established in the UK in 2000 to help settle disputes between consumers and UK based financial services businesses, such as banks, building societies, insurance companies, finance companies, financial advisers and investment firms.
You must first complain to the business that you are not happy with and give them the chance to put things right before the FOS will look in to a Loan PPI complaint, as the FOS cannot look in to loan PPI complaints unless you have complained to the business you are not happy with and you are not happy with the companies final response, or if they have rejected your complaint, or if you do not hear from them within 8 weeks of making your PPI complaint.
You will need to contact the FOS about a Loan PPI complaint within six months of the business’s final response. If you do not contact the FOS about a Loan PPI complaint within six months of the business’s final response then the FOS may not be able to look in to the complaint for you and it will be at the business’s discretion if they allow the FOS to look in to the complaint.
The Financial Services Compensation Scheme (FSCS) and Loan PPI Complaints
The Financial Services Compensation Scheme (FSCS) was established in the UK in 2001 to protect consumers when authorised financial services firms fail. The FSCS cover business conducted by firms authorised by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA).
They may pay compensation if a firm is unable or likely to be unable to pay claims against it. This is usually because the firm has stopped trading or has been declared in default. It is important to understand that the FSCS will only pay out a maximum of 90% of a Loan PPI claim for general insurance advice and arranging and the FSCS can pay compensation only for financial loss.
The FSCS does not cover the Channel Islands or The Isle of Man.
If you are looking to claim back Loan PPI from a lender that has now stopped trading or has been declared in default then please do not hesitate to contact us and we will be happy to assist you. We have assisted many clients to claim PPI from the FSCS when their lender has stopped trading or has been declared in default.
Due to the PPI deadline of 29 August 2019 we are no longer taking on any new PPI Clients. We will continue to carry out work for the clients that we are already working on behalf of so that we can provide the best service possible to them.