Mis-selling of Payment Protection Insurance
You may have heard the term ‘payment protection insurance’, or ‘PPI’ as it has become a massive scandal in the media. Originally, PPI was created to add a useful layer of protection to borrowers, who may be unable to meet loan repayments due to loss of work, an accident or illness. However, in 2011 a number of financial institutions in Ireland were accused of mis-selling PPI to customers, who would not benefit from this safety net. It was also proven that many customers were provided with PPI without signing up for the insurance. It has been estimated that PPI policies sold in Ireland equate to more than €1 billion, which includes roughly 64 million mis-sold policies. The scandal is significantly bigger in the UK with banks there paying back a staggering £38 billion to customers. It’s mind boggling how banks had the audacity to mislead the Irish public like this. They know what they were doing was unethical and now will pay the consequences.
In 2012 the Central Bank requested that several financial companies reviewed all of their lending, which involved sales of PPI from July 2007. The companies accused of possible mis-selling included; Bank of Ireland, Allied Irish Bank, EBS, GE Money, Permanent TSB, MBNA and Ulster Bank. The cut-off date of July 2007 was given to companies because this is when a new Consumer Protection Code began. If you think you were mis-sold PPI before this date, you may be able to claim a refund, but it will be difficult.
Were you Mis-sold a PPI policy?
There are many residents of Ireland which could be entitled to compensation and have no idea. So, if you took out a loan, mortgage or credit card in recent years it is worth checking your contract as you could be eligible for a tidy payout. The average payout is approximately €800 so it’s worth looking into.
A PPI checker can be used to establish whether you were mis-sold payment protection insurance. You could be entitled to a refund if:
- You were not sold PPI as an optional extra.
- You were not made aware of any pre-existing medical conditions which were not covered by the insurance.
- Your medical history was not checked.
- You were not told that interest would be charged for the PPI amount.
- You were not asked about your employment situation.
- Working sixteen hours or less per week.
- Self-employed or a contract worker
- No checks were carried out to see if you already held sufficient insurance.
- You felt pressured in any way to continue with the purchase.
- The finer points within the terms and conditions were not explained and sufficient answers provided to questions you may have asked.
If any of these points were not satisfied, then you could be entitled to compensation.
How to Get a PPI Refund
Although the companies reportedly completed their PPI reviews in early 2014, there are still many customers who have not yet made a claim, even though they are entitled to make one. If the company’s investigation found that you were mis-sold insurance, you should have already received correspondence offering you a full refund with interest.
However, if you are yet to receive a refund but believe you are eligible, you can still make a complaint. The first step will be to write a letter to the lender which clearly explains the reasons why you feel the PPI was incorrectly sold to you. Alternatively you can use a specialist claims company with a no win fee but they will take about 30% of your payout. To save money I recommend doing it yourself if your case isn’t too complicated. I don’t feel like paying someone 30% for just sending a letter or making a phone call.
Ask them to return the following things within their reply:
- A copy of any signed paperwork which showed your consent to the PPI payment.
- Confirmation of the fact-finding completed at the time by the person which sold the loan or card to you.
- The total cost of the PPI policy and confirmation of the amount paid by you so far.
- A copy of the original policy document with any explanatory notes to help you understand the detail.
The letter should be clearly addressed to the compliance officer which is responsible for reporting to the Central Bank.
The lender may decline your refund but don’t get discouraged. You can still appeal to the Financial Services Ombudsman (FSO). If the complaint is regarding a policy taken out in the last 6 years, the process is very straightforward. However, if the loan was taken out more than six years ago, the FSO can only investigate the complaint if you became aware of any mis-selling issues within the past 3 years. Another option is taking your case to the small claims court. It only costs €25 but the max payout is €2000.
This extension beyond the original 6-year claim period was brought in by new legislation in 2017. So, if your original claim was declined because the loan fell outside of the 6-year window, you could be eligible for a refund now. If the reclaim is successful the waiting period is anywhere from one month up to one year.