Payment protection insurance (PPI)

A guide to PPI mis-selling and how to make a claim.

Photo image of salesperson

What is payment protection insurance (PPI)?

If you took out a loan, credit card or mortgage in the last 10 years or so, your lender may have sold you a payment protection insurance policy (PPI). Because often lenders did not sell PPI properly, you may be able to get your money back.

You may have been mis-sold PPI if:

  • you were told that you would only get the loan, mortgage or credit card if you also took out PPI
  • PPI was added automatically and you were not told that it was optional
  • PPI wasn’t suitable for you because you were self-employed, on a contract, or a part-time worker, or if you weren’t working, were unemployed or had retired
  • you weren’t told what the policy covered or didn’t cover. For example, that medical problems you had when you took out the policy wouldn’t be covered.

How to make a claim

If you think you were mis-sold a PPI policy, you can make a complaint to your lender and claim a refund. You can do this yourself for free by phone, in writing or by email. Some lenders now offer special PPI helplines.

Find out more about PPI mis-selling and see an example complaint form on the Rip Off Britain website at www.bbc.co.uk/ripoffbritain

Claims Management Companies (CMCs)

Claims management companies (CMCs) offer to make your PPI claim for you, for a fee. However, there is no guarantee that a CMC will be more successful in claiming a refund than you would be yourself.

If you do choose to deal with a CMC, be aware:

Is there an upfront fee?
You could end up out of pocket if your claim isn't successful and the fee isn't returned.

What percentage does the CMC charge?
Most CMCs will take around 25 to 30 per cent of any compensation you receive, plus VAT.

Is the CMC registered with the Ministry of Justice (MOJ)?
Legally all CMCs have to be registered with the MOJ. Check online at www.claimsregulation.gov.uk. However, this does not guarantee that they are good value.

Further help

For more on how to make a complaint for yourself for free, contact the Financial Ombudsman Service on 0800 023 4567 or 0300 123 9123, or visit their website at www.financial-ombudsman.org.uk.

You can download a template PPI claim back letter from the Which? website.

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