PPI was often sold alongside loans or credit cards to cover the customer’s debt repayments if they were unable to work, perhaps due to illness or redundancy. But many people did not realise they had been sold the insurance or found that it was unsuitable for their circumstances: some policies did not provide cover for people who were self-employed, for example.
Customers who believe they were mis-sold a policy may be entitled to compensation from the product provider.
No need to pay fees
Claims management companies claim to make the complaints process easier and quicker for their customers. But in reality the Ombudsman says useful information is often omitted when a complaint is submitted by the third party claims management company.
Claims management companies also levy high charges – the Ombudsman says it is typical to see claimants hand over between 25% and 40% of their compensation to the claims companies . A few firms even levy up front fees that are payable even if the client does not qualify for compensation.
The number of complaints taken to the Financial Ombudsman Service more than doubled in the second half of 2012 because of a steep rise in payment protection insurance (PPI) cases.
Of the 283,251 new cases taken to the Ombudsman between 1 July and 31 December 2012, 211,885 related to PPI. Of these, half were handled by claims management companies, undermining the idea that these companies are more likely to achieve a positive outcome than those complainants who handle their own claims.
A spokesman for the Ombudsman says: “If you think you were mis-sold PPI there is no need to pay a claims manager to make a complaint. It’s just as easy to do it yourself – and it’s free.”
Some claims management companies cold call potential customers claiming to know exactly how much, down to the last 1p, they could be entitled to in compensation if they make a claim.
The Ombudsman spokesman says: “People fall for this - because it sounds so precise it’s got to be true. But we always emphasise there is no way that a claims management company can know how much money you could be owed for a complaint.”
How to make a PPI claim
The RBS Group, which sold PPI through RBS, NatWest, Ulster Bank, Lombard, Mint, Churchill and Direct Line, urges any customers who believe they might have a PPI claim to contact RBS Group directly. A spokesman for RBS Group says: “It’s easy and free of charge to make a direct complaint. We treat a complaint coming directly from you in exactly the same way as one received from a claims management company. Therefore there is no advantage to you in using a claims management company.”
Customers can find a guide to making a complaint about the way that PPI was sold on the RBS website.