If you have received a payout from the insurance, you won’t be able to claim the policy was mis-sold to you.
If possible find your copy of your policy’s terms and conditions. If you can’t find them, contact your lender to ask for a copy. Make sure it dates back to the time of your agreement as terms will change over time. Lenders can ask for £10 to provide this so include a cheque for £10 or a postal order to speed things up. The providers of PPI have a responsibility to ensure that you understand the nature of the product and that it is appropriate for you. All polices will have certain exclusions and you should have been told about them. As most policies are bought with a loan or credit card rather than standalone the key thing is. What was said at the point when you were sold the product?
The following are the key mis-selling categories and f you fit one or more of these you probably have a case but it is best to check with your claims management company first.
Single Premiums
A single premium policy is where the whole cost of the insurance is added as a lump sum at the start of the agreement, which is then repaid over the term of the loan. If you had one of these polices and left or changed the agreement part way through, you may be eligible for a part refund. This form of insurance is now frowned upon. In March 07, the regulator, the FSA said it thought they were likely to be unfair to consumers as they were restrictive and most didn’t allow refunds if a contract ended early, meaning you have paid the insurance for the whole term of the loan, even if it is not used. As a result of the FSA’s report, new and existing loan contracts must now allow refunds if a policy is ended early. This opinion greatly improves the reclaiming case.
Were you told or sold the wrong thing?
This covers anything from being told the insurance was compulsory, to not knowing you had even purchased PPI, to the fact you were already covered through work or your partner. It also applies if the policy isn’t what you agreed to, you got store card cover in a shop and it wasn’t explained or you didn’t realise it’s a joint policy but only in one person’s name. Lenders selling PPI polices are obliged to tell you about the specific criteria of the policy and to confirm it’s the right product for you. However, because PPI polices earn providers a high proportion of profit, staff are often highly encouraged to sell as many as possible, and are well remunerated for doing so, meaning mis-selling is rife. When you contact a lender by phone or in person if they don’t give you fair, correct and reasonable information it’s likely you were mis-sold. Due to the volume of complaints, the regulators are quick to act on this issue.
Some common examples of PPI mis-selling
Were you told insurance was compulsory?
It’s a common complaint that consumers are told they must buy a policy from the same provider as the loan or credit card to be accepted for the product. Any company that subscribes to the banking code agrees it will not insist that you buy an insurance product from them, so although it can request that you have PPI from somewhere, it does not have to be from them.
Therefore if the salesperson:
* didn’t make it clear the policy was optional,
* implied or stated the loan would be more expensive if you didn’t take the insurance,
* implied or insisted you take out their policy to qualify for the product or help with your application,
* was very pushy when selling the product so that you felt you could not say no,
* would not let you continue with the loan application if you did not sign the insurance agreement as well,
Did you already have insurance cover?
If you were already covered – for example you had a separate income protection policy or your employer provided an illness and redundancy package, and you informed the salesperson that you had this cover but they insisted you also had to take their insurance; or you weren’t asked if you had any alternative cover, go to the section.
Have you tried to cancel your policy?
Prior to Mar 07 some contracts had terms that said you could not cancel the policy even if you had paid off your loan or had a change of circumstances. Since the FSA looked into these refund terms, cancelling is now possible for all current and future contracts. So if you tried to cancel your policy and were told you weren’t allowed or that you needed to take out a new agreement with different terms claim now!
Is the insurance term too short?
Long term loans are often sold with a single premium policy lasting for a maximum of five years, no matter how long the loan is for. If you’ve now checked your policy and found that it does not cover the full term of your loan, but thought that it did, the salesperson should have pointed this out. If not- claim now.
Do you have a joint loan but the insurance is only in one name?
If you’ve checked your paper work and have found that all names responsible for paying back the loan are not covered under the insurance, which is unfair in itself as either could be chased for money if you get behind with payments, and were told or thought that all names were covered, claim now.
Did you sign up for the finance in a shop?
If you got a store card or insurance on a car dealership loan, it was likely to be sold by someone with no financial background, meaning more room for error, and a whole catalogue of misinformation could have been given. If this happened to you, check the insurance was sold in your best interests.
You didn’t realised you had been sold insurance?
Have you just checked your loan agreement or credit card statements to find that you have been paying for insurance, but didn’t realise until now that you had it or what it’s for? Some old agreements, particularly store cards, may have used pre ticked boxes requiring you to opt out of the insurance rather than opt in, which is unfair. Always check and if you’re paying for insurance you didn’t know you had claim now. If you have an inappropriate PPI product and weren’t told it was inappropriate or you don’t think you were given the full information on what the policy would and would not cover, send a letter asking for an explanation.
Mis-sold unemployment cover your policy only covers accident and sickness, with no unemployment element, this section doesn’t apply to you.
Is the policy suitable?
The unemployment element of PPI is only suitable for people who were ‘working’ at the time they took out the policy, therefore you should have been asked about this at the time of application.
Example question: Are you in permanent employment, self-employment or contract employment for more than 16 hours per week?
What is classed as ‘working’?
Providers have different definitions, so it’s important to examine your policy in detail. If you’re self-employed, check whether your specific set-up is covered. As the ‘unemployment’ element is a substantial part of the insurance cost, many who are self-employed have been paying for a semi-useless policy and this could’ve meant a huge waste of money. Those who were unemployed at the start of the policy (including students and stay at home parents), were almost definitely mis-sold the insurance as, obviously, you wouldn’t be covered for losing your job. The same applies if you knew you were going to become redundant or retire when you purchased the policy. If it isn’t suitable, were you mis-sold? Assuming the policy isn’t suitable; we must establish whether the salesperson bothered to check. Remember, it’s the situation you were in at the time you got the cover that counts, so if you were an employee then, but are now self-employed, that’s not their fault – unless you’ve subsequently asked if the cover was still suitable and been misinformed.
It’s likely you were mis-sold if either:
A. You made the salesperson aware of your situation and they suggested you get it anyway.
B. You weren’t asked about your employment status at all.
Age
Most polices have an upper age limit of 65 or 70, after which you’re not covered for anything. If you were older than this when you took out your policy, you were definitely mis-sold. If you have passed the age limit since taking out the policy, your cover and therefore payments should have stopped, but if they haven’t for any reason you’ll at least be entitled to a refund of payments made since passing the age limit.
This situation is rare, as providers’ records should flag up someone’s age being too high from their date of birth, but do check. If you were unemployed or retired, then check if the policy included unemployment cover. If it did, the unemployment cover is worthless and this should’ve been pointed out to you. If you were self-employed you need to check whether you were eligible for a payout if your business went bust (usually not) and if not, and it wasn’t pointed out, you may have a case. Have you been paying for a policy which includes ‘unemployment’? If you don’t need unemployment cover, perhaps because you don’t work or are self-employed, and mentioned this when you took out the policy, or were never asked about your employment status at all, a reclaim may be possible.
Medical issues
Most policies exclude existing medical conditions, meaning you are unlikely to be covered for any medical problems you have had in the past. This is something you should’ve been asked about and informed the policy could be affected. Lenders should ask about health issues when you get a policy, and if you weren’t informed the policy could be affected by medical problems or were never asked about your medical history, a reclaim may be possible. Example question: Have you had any illness, accident or other treatment which resulted in you being off work for more than 14 days?
What is a pre existing condition?
Each provider has its own rules, but most are strict and may decide whether to pay an insurance claim based on what it considers to be reasonable for you to have known about before the policy started. If you make an insurance claim on health grounds insurers may ask for medical records or proof you didn’t have the problem when you took out the policy, and will probably turn it down if you’ve had a similar medical problem before. This is one of the biggest reasons insurance payouts are rejected as providers often take a ‘broad approach, for example if you had a bad lower back problem, they may decide not to pay for other unrelated back problems.
Were you asked about your medical history?
Salespeople are not obliged to have a detailed medical discussion, but if they didn’t mention medical exclusions at all, the policy could be void. If you’ve had medical problems in the past this is not enough to make a reclaim, the key point is whether, at the time of application, you were told this was an important part of the policy and were asked to disclose any past health issues. Some insurers provide medical cover if you have been symptom free for a few years prior to taking out the policy, so do check your own paperwork carefully. If this applies to your policy, then you weren’t mis-sold, so this section does not apply to you.
Other health related issues
As well as pre-existing health conditions, some general health problems are specifically excluded from many polices, such as stress. Check the terms of your own policy carefully to see if any particular conditions are not covered and if you were not told about such exclusions from the policy, or were incorrectly informed when you asked about them, you may have been mis-sold.
Did you buy online?
If you bought your loan or credit card online, reclaiming more difficult as the full terms and conditions are usually available there. An exception to this is if you purchased from a lender using pre-ticked boxes, meaning you had to opt out of the insurance rather than opt in. In July 07 all lenders agreed to stop doing this but if you took out an agreement before this date check your policy for insurance.
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Several major providers, including Alliance & Leicester, Egg and Capital One have been fined for “not treating customers fairly”, and more are added every day it seems. The regulator, the FSA, has said it wants to see better practice and has fined several companies for failing to treat their customers fairly. More fines, which could be for up to £1 million, are expected.
