Should Borrowers ‘Do Their Own’ PPI Claims?

UK Consumer groups Which? and MoneySavingExpert have come together to launch an advertising campaign to encourage victims of mis sold PPI to ‘do their own claims’ rather than using PPI Claims Companies… and get this, they’re also planning to hold a “PPI summit” with the big UK banks and credit card providers with the aim of working together to “restore trust in the reclaiming process”.

This story has been published by all household news channels on the internet and in hardcopy over the past few days. Initially, we didn’t really know how to respond to it as anything that raises awareness of mis sold PPI and encourages people to claim back PPI is surely a good thing… right?

The problem we have is that they’re all focusing their attention on PPI claims companies… again… rather than putting pressure on the banks to repay their customers. If it wasn’t for the work done by some of the better claims management companies, the majority of people who have now successfully reclaimed their money… would never have done so and the mis sold PPI scandal would not have become so prominent.

The banks are still delaying the settlement of PPI complaints without punishment and would love nothing less than for PPI claims companies to disappear altogether… as this would mean that the number of people reclaiming PPI would be reduced by upto 75%.

So if Which? and MoneySavingExpert are going to see this through to the very end… until all victims of mis sold PPI have been refunded then we welcome the move. But we live in a cynical world, so please bear in mind that nobody does anything for free not even these so called ‘consumer champions’. The fact that they’re holding a summit with the banks to discuss how to eliminate PPI claims companies is not supported by us at all.

So… do we think that you should, as Which? and MSE so eloquently put it, do you own claims? Well, that depends on you really. The majority of people that use claims management companies do so because they don’t have the time, patience or confidence to deal with the banks themselves. So, if you feel confident that you can see it through then you should consider it as an option.

We recommend that you use a reputable claims management company because this will ensure that you get back exactly what you are owed. The FOS, FSA and FSCS have all come out and said that you are not likely to receive anymore money if you use a CMC compared to doing yourself. And, the MOJ has also told CMC’s that they cannot say that they will get you more than if you do it yourself… but we’ve heard form countless readers and CMC’s that the banks regularly offer less money than is actually owed. We spoke to one bank employee who told us that if he’d had a fight with his girlfriend the night before, then all PPI claims received the next day were going to be rejected!

Please consider your options carefully before deciding on which course of action to take. The banks want you to claim yourself because they’ll get away with paying you less and will receive less complaints overall… saving them £billions. But DO NOT chose a PPI Claims Company that resorts to cold calling to obtain your business and do not pay anything upfront to start your claim.

Record Number of Critical Illness Claims Rejected

One in ten critical illness claims, made by those suffering from a serious illness are turned down, according to a report by Money Mail. Their research suggests that the percentage of these claims being rejected by life insurance providers is at it’s highest level since 2007.

Insurers have been thoroughly probed regarding the matter, initially winning the battle against declined critical illness claims. However, the number crept up again to the tune of almost £80 million worth of claims… with many now turning to the Financial Ombudsman Service for help.

One case involves a 43-year-old woman, who was diagnosed with breast cancer; She had been turned down by her insurance provider because of some undisclosed medical condition.

Another case, involves mother of two, Caroline Quirk, who was found to be with cervical cancer who was also dismissed by her insurance provider, Scottish Provident, after not reaching the minimum month of giving up smoking – which is clearly an honest mistake.

Quirk was not reimbursed of the amount owed to her, but was given a meager £3,160 instead. After her claim, Scottish Provident terminated her policy.

The House of Lords is now raising a bill that would require insurance firms to specifically ask about any medical condition that would prevent policy holders from getting hold of their cover. They would also be obliged to pay a share of the claim if the holder made an honest mistake.

Other insurance firms like Royal London, Legal & General, and Aviva had been reported to have raised their dismissed claims, doubling last year’s number.

Meanwhile, the Association of British Insurers (ABI) has started a “non-disclosure” code that guarantees policy holders of the claim when they make an honest mistake.

Banks Continue To Use Delaying Tactics To Put People Off PPI Claims

With all the negative press that the banks are receiving for the mis selling scandals – mis sold emdowments, mis sold PPI, mis sold mortgages, mis sold interest swaps, and mis sold investments (i’m sure this list will continue to grow)…. you’d think that they would be on their best behaviour when trying to resolve complaints.

Well… that was wishful thinking…

After failing in their bid to avoid repaying customers who were mis sold payment protection insurance, they collectively set aside £billions and agreed deadlines with the FSA for settling PPI claims.

But… they’re continuing to make it as difficult as possible for borrowers to get their money back by rejecting the PPI complaints and forcing borrowers to pursue their PPI claims via the Financial Ombudsman Services… who are already struggling to deal with the ridiculously large volume of PPI compensation claims.

Senior Claims Manager at PPI Refunds UK, Rick Power, has expressed his frustration at the banks “… we ask the banks to provide us with a copy of the original credit agreements and all statement relating to our clients account… we then use this information to calculate the total refund… however, many of the banks, are now writing to us to informing us that they have never received a Letter of Authority (LOA) from the client, or the signatures on the LOA do not match their records, or some other nonsense reason… only to contact our clients directly and make a partial settlement offer that is less than half of the value of the actual refund… it’s ridiculous, the FSA needs to review how the banks are dealing with PPI claims.”

The banks have already missed their deadline for settling PPI complaints that were placed on hold pending the outcome of the PPI Judicial Review without punishment and are now flouting the rules once more to see how much they can get away with before they are reprimanded… similar to a child stealing from the cookie jar!

Remember… these are the same banks that went to court saying “We know we made £billions from mis selling PPI… we just don’t want to pay it back”… and they are used to doing as they please while the FSA watches on. This is becoming a game of wits… where the banks are trying their best to get away with having to repay the money they say they have set aside for their customers…

Our advice is to tread carefully… do not accept a settlement offer unless you are absolutely certain that it includes the PPI premium charged, plus any interest paid, plus 8% interest per annum.

Nationwide Offers PPI Alternative

Nationwide Building Society is the latest financial firm to offer an insurance alternative to payment protection insurance (PPI).

Known as the Lifestyle Protector, the product offers short-term protection to consumers in the event of unemployment, accident, or sickness. The maximum redundancy cover is £2,000. Customers are directly paid the benefits, which includes a £30,000 life cover.

Underwritten by Pinnacle Insurance, Policy holders are covered their mortgage, rental and utility bills as well as gym membership fees.

Customers are given the option to choose a waiting period of 14, 30, 60, 90, or 180 days and can stretch the amount when necessary.

Freshly launched last week, the Lifestyle Protector is offered under two terms; a six and 12-month term, and allows a maximum monthly benefit of £2,500 (an equivalent to 60% gross monthly earnings).

For one to be eligible to apply, He or She must be a resident of the UK, aged between 18 to 65, and must have worked, for a continuous term of six months, during the beginning of the policy, for the same employer, for at least 16 hours a week.

Lifestyle Protector offers similar services to the (notoriously mis-sold) product, but with more flexibility, says the building society. Unlike PPI, the product “tailors the benefits of customers according to what they need,” and will only be offered in Nationwide branches instead of independent financial advisors.

It can also be availed on advise and non-advise basis which will be made through telephone.

Lloyds and RBS: Majority of Our Customers Will be Compensated

After Barclays’ vow yesterday to compensate its customers of the payment protection insurance (PPI) it had mis-sold, two of its fellow high street banks had announced that it promises to answer all complaints, “regardless of when they were received”.

Lloyds Banking Group and Royal Bank of Scotland will see to it that vast a majority of their customers will be given recompense, if not promising all.

In a statement given by Lloyds, “We are handling all PPI complaints fairly and consistently, regardless of when they were received. We will ensure that we provide a clear response to every customer that has submitted a complaint to us before May 6 by the end of August. For customers that have submitted a complaint on or after this date, we will provide a full response within 16 weeks of receiving that complaint.”

RBS’ and Natwest’s spokesperson also gave its assurance that it will be handling complaints in the manner of accordance with the ruling implemented by the Financial Services Authority (FSA).

Martin Lewis Urges Borrowers to Reclaim PPI on BBCs Watchdog

Consumer Champion and Money Saving Expert, Martin Lewis, appeared on BBC Watchdog last night to talk about the mis sold PPI scandal and urged borrowers to claim back PPI if they feel they may have been mis sold Payment Protection Insurance.

Payment Protection Insurance or PPI, was widely mis sold by the banks over the past decade alongside loans and other borrowings, generating huge profits for the banks. Those who were mis sold, are now able reclaim mis sold PPI by contacting their lenders and asking for a full refund. The banks have now set aside over £5 billion to repay their customers and Martin Lewis was at hand last night to advise on how to proceed with your PPI Claims.

The full interview is available via BBC iPlayer now.

Clydesdale Bank Sets Aside £100m as PPI Compensation Provision

Following the British Bankers Association or BBA’s decision to abandon their attempts to overturn the policies of selling and handling the controversial payment protection insurance or PPI, Clydesdale Bank PLC has also joined in the redress. Today, the financial institution announced its additional provision of £100 million to its customers.

Clydesdale, a subdivision of The National Australia Bank (NAB) (alongside Bank of New Zealand, Yorkshire Bank, and Great Western Bank), will continue to work in order to resolve the issue of PPI claims promptly and fairly.

In 2009, announcements of the NAB Group and Clydesdale Bank’s 2009 disclosure on proposals of redress on the issue, its most recent update was included in the group’s March 2011 Half year results announcement.

April 9 of this year, the High court’s decision fell in favor of the Financial Services Authority (FSA) and soon enough, the month after, on May 9, the British Bankers Association decided to withdraw its plea in trying to change PPI handling policies in order to regain consumer trust and confidence.

The National Australia Bank (NAB) said “the provision reflects an assessment of future PPI claims based upon estimates, statistical analysis and assumptions in relation to a wide range of uncertain factors, including how many PPI claims will be made against Clydesdale Bank PLC, for what value, and the prospects of mis-selling being established in relation to those claims”.

PPI originally is meant to cover consumers who are no longer able to make repayments on mortgages, unsecured personal loans and credit cards, and are mostly sold “unknown” to its customers.

History of Mis Sold PPI by PPI Refunds UK

The mis sold ppi scandal has received a lot of attention over the past few weeks following the banks’ decision to abandon their court appeal. They have since agreed provisions for PPI refunds with the FSA. Here we outline what all the fuss was about and how the story unraveled,

1998: The Issue of Payment Protection Insurance being a poor-value product, due to the expense and exclusions, was first raised in Which? magazine.

January 2005: The Financial Services Authority (FSA) took on the regulation and sale of general insurance products and stated that a PPI review would be one of its priorities for that year.

September 2005: The Citizens Advice Bureau (CAB) published “Protection Racket” – a report identifying the problems in the PPI market and issued a Super Complaint to the Office of Fair Trading over PPI sales.

November 2005: The FSA issued its first report on PPI and identified improper sales practices and lack of compliance controls in the PPI market. Following mystery shopping exercises it wrote to all chief executives of the big banks and highlighted its key findings.

October 2006: The FSA issued a report with more evidence of poor compliance and continued PPI mis selling. 24 companies were entered into “enforcement procedures” for mis selling PPI.

October 2006: The Office of Fair Trading (OFT) issued a report on PPI mis selling, stating that it intends to refer the issue to the Competition Commission.

January/February 2007: The FSA imposed fines on the major PPI providers for treating customers unfairly.

February 2007: The OFT made a formal referral regarding the mis selling of PPI to the Competition Commission.

January 2008: The Competition Commission published its paper on profitability of Payment Protection Insurance.

April 2008:The Competition Commission then published two further papers highlighting more problems in the PPI market.

May 2008: Which? magazine published research into how PPI was being sold alongside loans. It discovered that up to 2m people may have been sold a PPI policy that they may never be able to claim on.

July 2008: The FSA began to investigate how firms are were handling PPI claims.

September 2008: Which? published research into PPI sold alongside credit card. It discovered that 1.3m people may have been duped into thinking that they would be approved for credit if they took out PPI.

January 2009: The Competition Commission recommended that banks selling loans should not sell PPI at same time.

February 2009: The FSA wrote second letter to the banks’ chief executives asking them to stop selling single-premium PPI policies with loans.

May 2009: The FSA banned the sale of single-premium PPI policies.

September 2009: The FSA launched a consultation paper outlining how the handling of PPI complaints could be improved.

October 2010: The Banks, led by the British Bakers Association (BBA) requested a Judicial Review of the new guidelines, arguing that they imposed rules retrospectively.

October 2010: The Competition Commission confirmed that PPI could not be sold at point of sale.

January 2011: The PPI Judicial Review began in the British High Court.

April 2011: The High Court Judge, Justice Ouseley, ruled in favour of the FSA and FOS with the banks given 21 days to appeal the ruling.

May 5 2011: The Lloyds Banking Group became the first to withdraw from legal challenge, saying it wanted to “draw a line” under the unsavoury affair.

May 9 2011: The other member banks of the BBA (Barclays, HSBC, RBS) also decided not to appeal against High Court ruling.

May 11 2011: The news of the PPI Compensation provisions that the banks had agreed with the FSA began to filter out.

Financial Reform

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