Since the payment protection insurance (PPI) scandal began in 2006 more than £35.7bn has been handed out in compensation. Claims-handling firms have grown rich and banks have seen their profits severely dented. But an era is soon coming to an end. You only have until 29 August to submit a new PPI claim. Any received after that will automatically be rejected.
Almost a third of people owed money for mis-sold payment protection insurance have yet to make a claim, says Adam Williams in The Daily Telegraph. As many as 64 million PPI policies were sold in the UK, mainly in the 1990s and 2000s. They were sold alongside loans, credit cards and other borrowing with sales pitches telling people it would help them meet their repayments if they became ill or unemployed. Yet policies were often sold to those who were not eligible and exclusions in the small print meant many people would never be able to make a claim.
Research by the Financial Conduct Authority (FCA) has found that "72% of UK adults hit a significant milestone' during the 1990s and 2000s that might have required taking out a financial product linked to PPI", says Rupert Jones in The Guardian. "Forty-nine percent bought a car, 35% purchased a house and 27% got married. More than four in ten people recalled taking out credit to help fund these, including products that commonly had PPI attached, such as loans, mortgages, credit cards or store cards."
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Mis-selling happened in a number of ways: you were mis-sold PPI if you were told it was compulsory to take it out, if it was added without your knowledge, or if it wasn't a suitable product for your circumstances. The latter restriction could apply if you were unemployed, self-employed, retired, or had a medical condition that would stop you from working all of which could have meant you wouldn't have been able to claim on the policy.
Getting your money back is a simple process. There are plenty of claims-handling firms offering to do the paperwork for you, but they can take up to 20% of your compensation. Given the average payout is £1,700, you'll be paying them £340 to fill in a couple of forms. Better to do it yourself. The FCA has a list of providers that sold PPI on its website, so you can check if anyone you've had products with is on there. You can then go to your provider's website to fill in a claims form, or download a template letter from moneysavingexpert.com or which.co.uk and send that off.
"It's free to do yourself and you don't need to worry about paperwork," says Emma Stranack who runs the FCA's PPI campaign. "You just need your date of birth and previous home addresses to get started."
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Ruth Jackson-Kirby is a freelance personal finance journalist with 17 years’ experience, writing about everything from savings accounts and credit cards to pensions, property and pet insurance.
Ruth started her career at MoneyWeek after graduating with an MA from the University of St Andrews, and she continues to contribute regular articles to our personal finance section. After leaving MoneyWeek she went on to become deputy editor of Moneywise before becoming a freelance journalist.
Ruth writes regularly for national publications including The Sunday Times, The Times, The Mail on Sunday and Good Housekeeping, among many other titles both online and offline.
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