Reclaiming PPI on Loans, Mortgages or Credit Cards
Payment protection insurance (PPI) has been sold for more than a decade to millions of people throughout the UK, attached to loans, credit cards, store cards, mortgages and other financial agreements.
Reclaiming mis-sold PPI on Loans
Although payment protection insurance can often be a useful product, it has historically been mis-sold to customers by banks & lenders. It was much easier to sell PPI alongside a loan than a credit card for example, because of the size and length of a loan.
Lenders identified that customers are more likely to come out of work during the length of the loan repayments – especially with some loans running as long as 5 or 10 years. It’s logical that there is a possibility the customer will run into trouble at some stage of repaying the loan and this was often used to make customers feel pressured into purchasing PPI.
Widely mis-sold on loans
PPI policies were frequently sold by various lenders but in many instances, policies were not sold in the correct way.
The Citizens Advice Bureau found that only 15-20% of PPI policy holders were able to make a successful claim (source) – compared to 74% for motor insurance claims and 55% for household claims. This shows how profitable PPI policies were for the lenders that sold them, with less than 1 in 5 people able to make a successful claim. It is because of this that the PPI policies were so heavily mis-sold to customers.
PPI was even added to some loan agreements without the client being aware they had bought the product. Some finance applications required you to ‘opt-out’ of PPI, but this was often not mentioned – leaving you with a product you were unaware of. If you topped up that loan one or more times – it was not unusual for lenders to add PPI to the new loan; again without ever asking you if you wanted it, needed it or were even eligible to claim on the PPI policy.
Examples of mis-selling
- Were you led to believe it was a compulsory part of the loan process?
It wasn’t – PPI is always an optional product for loans. It also wouldn’t have impacted on the lenders decision to give you the loan. If you were told it would increase your chances of getting the loan, then you may have been mis-sold the product.
- Did you feel pressurised into taking PPI?
The sales person should have made sure you were comfortable with what was on offer and not forced the deal on you. If you were pressured into taking out a policy you didn’t need, then you could have been mis-sold the loan PPI.
- Were the costs fully explained?
PPI advice given by sales advisors should have included a breakdown of the cost as a separate item, not hiding it as part of the overall loan repayment schedule. Your loan PPI may have been mis-sold if you were not made aware that it was a separate cost.
- Was your employment status discussed with you?
If you were retired, a student, unemployed or working part-time when you took the loan out, you may not have been eligible to make a claim on the PPI policy.
- Were alternative policies discussed with you?
The same cover offered by a loan PPI policy is often available elsewhere at cheaper cost.
- At the point of sale were you eligible for full sick pay from your employer?
If your lender didn’t enquire about your sick pay policy, or sold you PPI regardless, you may have been mis-sold to.
- Were the exclusions attached to the policy properly explained to you?
One of the big features of PPI loan policies is that there are a significant number of exclusions – like having a pre-existing medical condition – which could mean the policy would not pay out if you needed it to.
Reclaiming mis-sold PPI on Mortgages
Mortgage payment protection insurance (MPPI) has been sold alongside mortgages for more than a decade. Borrowers paid for an insurance policy to make sure their mortgage payments would be covered until they got back on their feet if they were unable to work.
Unfortunately, thousands of these policies were mis-sold in the same way PPI was mis-sold on loans and credit cards. Costly MPPI policies were sold in large numbers by sales staff, and the full implications and exclusions of a policy were often not explained to prospective borrowers.
This happened in a variety of different ways:
- If the sales person did not give you a full breakdown of the cost of the policy separately from the mortgage advance then they broke the rules.
- If MPPI was sold to you when you were a student, retired or unemployed – you may never have been able to claim on the policy.
- Were you made aware that it was an optional product and not compulsory? If you were told taking PPI would increase your chances of getting the finance, then the product may have been mis-sold to you.
- Borrowers were often pressurised into feeling they had to take out a policy to ensure they would be accepted for the mortgage. If you were made to feel this way then you may have been mis-sold to.
- Were you eligible for full sick pay from your employer at the point of sale? If so, you shouldn’t need the policy because your payments should be covered by your sick pay.
- The lender should have checked if you already had alternative cover in place.
- When giving you PPI advice, did the lender discuss alternative policies with you? The same cover offered by a lender’s MPPI policy can often be found cheaper elsewhere.
- Policies of this type often have exclusion clauses built into them which mean they won’t pay out in certain circumstances – like suffering from a pre-existing medical condition. You should have been warned about these exclusions at the point of sale.
Reclaiming mis-sold PPI on Credit Cards
Sales of credit card PPI have been massive over the last decade and more. Figures from a survey conducted by Which? magazine suggest that more than 1.3 million people took out PPI with their card after being mis-led by sales staff.
Sold properly, payment protection insurance will ensure that your card payments are met if you have to come out of work through accident, sickness or unemployment.
But, all too often, the insurance was mis-sold to people who didn’t want it, didn’t need it or could never have used it.
How was it mis-sold?
Credit card PPI was mis-sold on an industrial scale by lenders between 1988 and June 2011. In fact, the sheer scale of the whole episode has made PPI mis-selling the biggest scandal in UK financial history, according to Which? magazine.
And there were a whole host of ways in which the insurance was mis-sold:
- Did the advisor suggest you take out PPI when you were a student, retired or unemployed? You could have been mis-sold the policy, as you may not ever have been able to claim on it if you needed to.
- Did you already have your own existing insurance in place? Then you didn’t need a new policy.
- Did you feel pressurised to take the insurance to make sure you got the credit card? PPI is always optional and should not be made a condition of obtaining another service.
- The PPI advice given on sale of the policy should have included a full price breakdown, separate to the costs associated with the card.
- You shouldn’t have needed the insurance if your employer gave you full sick pay because you should never have had trouble making your payments.
- Were the exclusions associated with the card insurance explained to you? For example, you should have been made aware that the policy may not pay out if you had a pre-existing medical condition.
- Finally, were you even aware that PPI was attached to your credit card? Policies were often added by sales staff without even advising the client they had done so. If you have it and didn’t ask for it, you may have been mis-sold.
Make your claim with Gladstone Brookes
Gladstone Brookes offer a Free PPI Check** to start your PPI process; this aims to identify any PPI you were sold by your lenders in the past.
If PPI was or may have been present, you can then proceed with the PPI Claim service, which aims to recover any PPI you may rightfully be owed by your lenders. We aim to recover any premiums you have paid, plus any interest on those premiums and where possible a further 8% in statutory interest.
Should we be successful in recovering any refunds for you through our PPI Claim service, our fees are 25% +VAT of the total redress offered by the lender. If we are not successful, there will be no charge.
Gladstone Brookes have conducted thousands of successful PPI claims, recovering more than £975m± for our clients so far.
If you think we can help you then please complete our PPI check form or call us now on and one of our friendly, knowledgeable advisors will be happy to help you.