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Unless you’ve been asleep under a rock (or not living in the UK), you can’t have failed to notice the PPI scandal that has dominated the fiancé headlines over the past year or so. Just in case you haven’t heard about it, here’s a brief overview of what happened:

  • Many UK banks sold insurance policies to millions of customers, know as Payment Protection Insurance (PPI). These policies supposedly protected the person if they were not able to repay a loan, credit card or mortgage, due to being out of work through illness, or other unforeseeable circumstances.
  • It was later found that a huge number of these policies were sold to customers who couldn’t actually make a claim should they need to, because of their circumstances, or the customer never actually knew they’d been sold it and paid monthly premiums unknowingly.
  • The press got wind of this scandal and the country exploded. If policies were mis-sold, then customers should be able to claim their money back. This view was shared by the Financial Services Authority (FSA), who challenged the banks whenever they appealed against complaints.
  • By April 2012, the High Court ruled that the banks could not appeal against complaints regarding PPI. If it was found that the policy was mis-sold, the banks now had a legal obligation to repay the amount, in full.

Now over a billion pounds has been repaid to millions of customers, but there is still millions that has still not been claimed. As such, a number of third party companies have been set up to help track these people down and help them to make their claim, all for a small fee. But if you can claim directly from the bank, free of charge, why would you ever use one of these companies? Are they even safe?

As with many types of company, you do have the ‘bad eggs’ out there who will use immoral methods to make as much money as possible. However, not all of the companies out there are immoral and do actually provide a valuable service.

Firstly, these companies are helping to track the people down who were none the wiser about the fact that they can actually claim money back. They even help people to find out if they did pay PPI in the first place. Without this, the banks get to keep the money in their greedy little hands.

Secondly, many of these PPI companies have in-depth knowledge of PPI, meaning that they can claim the maximum amount possible back from your bank. Many banks offer a fixed settlement, which is often much less than the amount that you are actually entitled to. Many people accept this offer and lose out on substantial amounts of money. PPI claims companies will not accept this, as it is in their interest to reclaim the maximum amount possible

Thirdly, although the FSA has issued guidelines to make it as easy as possible to reclaim the cash, the process can often be time consuming and confusing. Your PPI claims company will do all the hard work for you.

It is certainly worth doing your research before letting a claims company take hold of your case, as some companies offer better deals than others. However, their certainly are some great companies out there who offer a high level of service and reclaim the maximum amount possible back for you.

This post was written by Peter Harris – a finance expert from the UK. Peter contributes regularly to a number of finance blogs.