It pays to persevere with your PPI claim

If you have had your claim for compensation for payment protection insurance (PPI) mis-selling rejected, you shouldn’t give up. That’s the message out from Lloyds this week.

The bank has just announced that it has put another £1.8bn aside to pay customers for the decades of premium theft they have been subjected to. But not all of that is for settling new claims: £300m is being kept for a “re-review of previously defended complaints”.

It turns out, says Elaine Moore in the FT, that the big banks haven’t been quite as good as they could have been at paying out for valid claims. Lloyds, in particular, has shown a “particular fondness for rejecting” them.

In total, some 75% of the customer complaints about PPI mis-selling that were referred to the Financial Omsbudsman (this is where you go when your bank rejects your claim) were upheld in the year to September 2013. For complaints relating to Lloyds, it was 90%.

So if your claim was rejected – and you think it shouldn’t have been – you need to have another go. If you win, you get back the money you paid in premiums, any interest you were charged as a result of having those premiums added to your debt, plus interest on the full amount paid at a startlingly healthy rate of 8%.

You might say that you would have preferred not to have been ripped off in the first place, but nonetheless, the compensation deal is a pretty good one: you’ve effectively been forced to save and ended up getting an excellent return on your savings.

The average sum paid out so far is not far off £3,000 – which might well be one reason that car sales in the UK are so healthy right now.

So what do you do? If you think you might have a claim (and if you took out a loan of any kind, including a mortgage anywhere from 15 to three years ago, it is entirely possible), but haven’t yet got going with the whole thing, visit www.which.co.uk.

You can use their online complaint tool to do the whole thing via email. Your bank should respond within eight weeks. If you don’t like its response, you can then escalate your complaint to the Financial Ombudsman at no cost (www.financial-ombudsman.org.uk).

Finally, if you do get the attention of your bank and find yourself in possession of a large cheque,remember this: the 8% interest element of it is taxable income. You need to declare it to HM Revenue & Customs and pay the tax due on it.

You can either do this via a self-assessment return, or on the basis that it is a one-off payment you may be able to talk to the tax office to arrange to pay your bill over the year via your tax code.

66% off newsstand price

12 issues (and much more) for just £12

That’s right. We’ll give you 12 issues of MoneyWeek magazine, complete access to our exclusive web articles, our latest wealth building reports and videos as well as our subscriber-only email… for just £12.

That’s just £1 per week for Britain’s best-selling financial magazine.

Click here to take advantage of our offer

Britain is leaving the European Union. Donald Trump is reducing America’s role in global markets. Both will have profound consequences for you as an investor.

MoneyWeek analyses the critical issues facing British investors on a weekly basis. And, unlike other publications, we provide you with the solutions to help you turn a situation to your financial advantage.

Take up our offer today, and we’ll send you three of our most important investment reports:

All three of these reports are yours when you take up our 12 issues for £12 offer today.

MoneyWeek has been advising private British investors on what to do with their money since 2000. Our calls over that period have enabled our readers to both make and save a great deal of money – hence our position as the UK’s most-trusted investment publication.

Click here to subscribe for just £12