What is mis-sold PPI?

Payment Protection Insurance (PPI) protects the repayment of a debt should a borrower be unable to make a payments due to accident, sickness or unemployment (ASU). It was mis-sold by many loan companies and high street banks for a decade, with products such as mortgages, loans, credit cards and overdrafts being covered with unethical, and now illegal, PPI policies.

PPI was mis-sold by lenders to millions of people in the UK. PPI is classed as mis-sold if: it was added to a loan product without the policyholder's knowledge; the policyholder was misled into believing that PPI was not optional; the policyholder was told that a loan or credit card was 'protected' without the full conditions or cost of the PPI being explained; or if the policyholder was led to believe that PPI would help with the approval of a loan. Some online lenders mis-sold PPI when they presented pre-ticked boxes for PPI, meaning that a borrower had to choose to opt out.

The mis-selling of PPI happened on a huge scale, with around a quarter of all PPI policies estimated as being mis-sold. This went on for a decade until April 2011. Last year the courts decided that selling PPI in these ways was unethical and told loan companies and banks to return around £4bn to 2.5 people in the UK. This money is only going to be returned to consumers who make a valid PPI refund claim.

Finding out if you have been Mis-sold PPI

Perhaps you now realise you have been mis-sold PPI, but what next? Look through your loan agreement and find out if you have been paying money for 'payment cover', 'ASU', 'payment protection', 'loan protection' or a similar term. If you feel that these policies were sold to you under the false pretences mentioned above you are due a refund, even if the loan which your PPI was covering has been paid back.

You may find that your PPI was paid as an additional charge with each loan repayment, or as a one-off payment at the start of your contract.

A credit report will list all of your financial products for the last six years, so this might be useful if you do not remember who your lender was. It doesn't matter if you don't have a copy of your paperwork for your loan either; once you know who your lender is, you have a legal right to obtain a copy of your original agreement from them for £1. If your account is closed they are not obliged to provide this paperwork, but buying a full breakdown of your account will show you whether you were sold PPI.

Mis-sold PPI can be only claimed if the payments were active within the last six years. So as long as you were still paying back a loan and its Mis-sold PPI six years ago, even if the loan was taken out ten years ago, you are due a claim.

How much can I claim?

Mis-sold PPI claims companies tell people whether they are entitled to make a claim and guide them through the repayment process. You will not be able to reclaim your full loan, but the mis-sold PPI on that loan will likely still be a sizeable sum which you can reclaim.

If you took out a loan of £3,600 for three years with a monthly repayment of £100, you could be due a return of £540. For bigger loans and mortgages this sum could be in the thousands.