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.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
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.
