The Independent's journalism is supported by our readers. When you purchase through links on our site, we may earn commission.
Beginner's guide to: Reclaiming mis-sold PPI
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.What is PPI?
The idea behind Payment Protection Insurance is that it covers your debt payments if you become unable to work due to an accident, sickness or unemployment. It can be sold alongside all sorts of debts from credit and store cards to mortgages and personal loans.
What is the problem?
These policies usually cover you for 12 to 24 months after any payout from your employer, but not for the most common reasons for being off work – stress or back problems.
The cover is very expensive compared to alternative, longer-term and more comprehensive cover like income protection insurance. When sold alongside loans or finance agreements, PPI is often sold as a 'single premium policy', which means a lump sum covering the cost of the insurance is added to the amount you have borrowed, so you end up paying interest on both the insurance premium and the loan. Adding PPI to a £7,500 five-year loan could cost an additional £2,000-£3,000, for example.
There is also evidence that customers are wrongly led to believe they cannot take the loan or credit unless they take out a PPI policy as well. Consumer watchdog Which? estimates two million people have been mis-sold PPI they can't use, and only around 11 per cent of claims are paid.
What are the regulators doing?
Single premium PPI policies will be banned as of May this year. From next year, lenders will not be able to sell PPI policies within seven days of selling a loan or credit card.
What do I do if I was mis-sold a PPI policy?
Many complaints handling agencies deal with reclaiming PPI premiums and interest, for a cut. But others offer similar help for free, including Which? at www.which.co.uk/ppiclaim. Users select their provider from the menu, fill in their contact and PPI policy details, answer basic questions about why their policy was mis-sold and the tool creates an email that can be sent directly to the provider or printed out as a letter.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments