How To - Reclaim PPI for FREE

You can reclaim £1,000s on PPI yourself, easily, for free. Don't hand 30% to a no-win no fee claims handler. Everyone who's got or had a loan, credit or store card, catalogue or car finance should check now if they were flogged these policies.

The banks lost in court after years of systemically mis-selling PPI. Now they've put up to £9 billion aside to pay out. This is a step-by-step DIY guide including a full FAQ and free template letters on how to join the millions who've complained and been paid back money wrongly taken from them.

STEP 1. CHECK YOUR POLICY

Not got your paperwork? 

While it isn't always necessary, as you can start a reclaim without it, if you don't have a copy of your agreement or T&Cs you can contact your lender to ask for a copy (make sure T&Cs date back to the time of your agreement as terms will change over time).

Lenders can ask for £1 to provide this but not all do so you could include a £1 cheque (don't send cash, though) to speed it up a little. It may not provide the agreement if your account is closed but you can then ask for a full breakdown of your whole account (this can cost £10).

STEP 2. THE PPI MIS-SELLING CHECKLIST

Now it's time to go through the checklist below. Sellers of PPI have a responsibility to ensure you understand the nature of the product, and that it's appropriate for you. All policies will have exclusions, and you should have been told about them. As most policies are bought alongside a financial product rather than on their own, the key issue is:

... what was said at the point you were sold the product.

Here are the key mis-selling categories. If you fit one or more of these you probably have a case:

Were you told it was compulsory?

It's a common complaint that consumers are told they must buy a policy from the same provider as the loan in order to be accepted for the product. This is mis-selling.

Any company that subscribes to the Lending Code (see list) agrees it won't insist you buy an insurance product from it. Therefore if the salesperson:

• Didn't make it clear the policy was optional or tell you about any cooling off period
• Implied or stated it would be more expensive if you didn't take the insurance
• Implied or insisted you take out their policy to qualify for the product or help with your application
• Was very pushy when selling the product, so that you felt you could not say no
• Would not let you continue with the application if you did not sign the insurance agreement as well

Didn't realise you had cover?

Have you just checked your loan agreement to find that you've been paying for insurance, but didn't realise until now that you had it, or what it's for?

Some old agreements (pre-July 2007) may have used pre-ticked boxes so you had to opt out of the insurance rather than opt in, which is unfair. Always check this, and if you're paying for insurance you didn't know you had

Were you told or sold the wrong thing?

This covers anything from the fact you were already covered through work or your partner, the policy not being what you agreed to, the insurance term is shorter than your loan and you didn't realise, or if you thought it was a joint policy but in fact it was only in one person's name.

Self-employed, unemployed or retired?

If you were unemployed or retired, check if the policy included unemployment cover. If it did, the unemployment cover's worthless – this should've been pointed out.

If you were self-employed, check whether you were eligible for a payout if your business went bust (usually not) – if not, and it wasn't pointed out, you may have a case.

Had any medical problems in the past?

Most policies exclude existing medical conditions, meaning you're unlikely to be covered for any medical problems you've had in the past. You should've been asked about this, and informed the policy could be affected.

Has your provider already been fined?

The regulator, the FSA, has said it wants to see better practice. Many major providers, including Alliance and Leicester, Liverpool Victoria and Capital One have been fined for "not treating customers fairly". If yours has, it's very likely you've a case.

STEP 3. WRITE TO YOUR LENDER

Write the company that sold the policy and ask for a refund. In the old days this often meant following a dance - thankfully it's much easier now. (You can easily find guides online)

The most important thing to understand is: don't be put off if you're rejected. You may also need to go to the Ombudsman later, but you need to have written to the lender first.

STEP 4. WRITE TO THE OMBUDSMAN

If you still haven't reached a satisfactory conclusion, it's time to make a formal complaint to the Financial Ombudsman Service. 

This is the official independent service for settling disputes between financial companies and their customers. The Ombudsman is completely free to use, and will adjudicate on whether your complaint should be paid out.

It'll decide whether your policy was sold unfairly or unreasonably (see some examples). It can only do so once eight weeks have passed from the date of your first complaint letter (between June and Dec 2011 banks had 12 weeks to deal with complaints), unless your case was put on hold by the lender and it specifically suggests you go to the Ombudsman (although this should no longer be happening).

While the process of using the Ombudsman is simple, and the amount of money you could receive is massive, it's not usually quick. Your case may take over a year to be settled, so don't count on the cash now.

How to make a complaint

Just contact the Ombudsman and ask it to take on your case. You can either do this via the Financial Ombudsman Service website or by calling 0800 0234 567 (or 0300 123 9123 from a mobile). It will look at each case individually, so if yours is a matter of you saying one thing happened but the company disagrees, the Ombudsman will decide if it thinks the company acted fairly.

As the party with responsibility to provide full details of the insurance, the lender is expected to have more evidence on what happened to back up its case.

In the last six months, of the cases that needed to go as far as the Ombudsman, 88% were awarded in consumers' favour. And even if yours isn't, there is no penalty for losing - it just means you don't get the money back.

The Ombudsman will then send you a confirmation letter to say it'll look into your case and get back to you if it needs any more information.

Sometimes this will take a long time, usually around a year but may be even longer as the Ombudsman deals with huge numbers of complaints. But don't worry - you can leave the matter to the Ombudsman to resolve and it will contact you with any offers from your lender.

If you think the Ombudsman wrongly turned you down

The Ombudsman's decision is usually made by an assigned case worker, but if you disagree with the result you can ask for a formal decision to be made by one of the 41 actual Ombudsmen at the service. This usually takes several months as it involves a detailed investigation into your case, but don't be afraid to push your complaint further if you think the initial decision isn't right.

After that, while the finance company must accept the Ombudsman's decision, you still have the right to take the company to court. It's also worth noting that if you feel the Ombudsman hasn't handled your case correctly, eg, there have been unnecessary delays, you can refer it to the Ombudsman's Service Review Team.

If that doesn't resolve it you've a right to go to the Independent Assessor, though this is only about quality of service, not the actual decision made.

Misleading Commercial Practices: Unfair Trading Regulations 2008

The practice of incorrect or misleading descriptions, statements, marketing and pricing was made unlawful under the both the Consumer Protection Act and the Trade Descriptions Act. This legislation has now been replaced in large part by the Consumer Protection from Unfair Trading Regulations 2008. The regulations outlaw three specific practices:

• Misleading actions.
• Misleading omissions
• Aggressive sales tactics.

1. Misleading Action

If false or inaccurate information has been used in relation to a product or a service, and this information has induced you into a purchase you would not have otherwise made, you can claim that the action was misleading. It also covers assertions made about the company selling to you. If, for example, the company makes untrue claims to have certain qualifications, or that they are members of an approved trade organisation, this is a misleading action. This is also the case if they claim to adhere to a code of practice which they then do not follow.

2. Misleading Omissions

The problem may be not what is stated but what is not. Therefore if information is omitted or hidden, presented in an unclear, unintelligible or ambiguous way, or given too late to the consumer, then it can be found to be misleading and in breach of the regulations.

Companies are required by law to include certain information about themselves , about performance of their contractual obligations, or in relation to consumer rights where there is a cooling off period. If they do not, then this is also misleading.

Incorrect Pricing

Incorrect or misleading pricing information is a common cause for complaint and is covered in these regulations.
Firstly, you should be clear that shops are not legally obliged to sell you their products and reserve the right not to do so if they wish. This means that if you pick up something which is wrongly priced, you do not have a right to buy it at that price. Having said this however, it is still unlawful for shops and suppliers to display an item at a price which is different to the price requested at the point of sale. Exceptions to this are obvious mistakes where, for example, a TV is priced at £8.99 instead of £899.00. An action is also misleading if it includes the manner in which the price is calculated and whether the item is being marketed as ‘discount’ or ‘for a limited time only’ – when in fact it is not.

Where the price given does not include taxes, delivery charges or any additional surcharges such as handling or admin fees, this is considered to be a misleading omission.

3. Aggressive Sales Tactics

When buying an electrical product we are frequently confronted with the option to buy additional insurance policies in the form of extended warranties. Sales staff can get generous commission for convincing us to part with more cash through the sale of these policies and this has led to aggressive sales tactics. The regulations aim to stamp out such practices if they are considered to impair your freedom of choice or limit your ability to make an informed decision. This includes harassment, coercion, persistence, threatening or abusive language, exploitation of misfortune or specific circumstances. It also includes retailers’ standing in the way of your contractual or consumer right to terminate a contract or switch to another product.  However you must also prove that the way you were treated led you to make a purchase decision you would not otherwise have made.

Taking action against retailers

The regulations referred to here are within the scope of criminal law. What this means for the consumer is that you cannot take direct action against retailers if you find them to be in breach of any of the above. Instead, you would need to report the matter to the enforcement authorities (Trading Standards), who will investigate, and perhaps even prosecute. A prosecution would not be carried out on the consumer’s behalf but on the state’s behalf, and so you will not yield any personal benefit from this process (unless perhaps a feeling of satisfaction!).This is not to say that you cannot threaten to inform the authorities if they do not resolve the situation to your satisfaction within a reasonable time period.

Gym Membership Advice

For years, the OFT have been keeping a close eye on health and fitness clubs with specific reference to the fairness of their gym membership contracts. Typically, consumers have been required to sign agreements which commits them to a 12 month minimum term, which absolutely ties them in to making the monthly payments for that period. Many consumers have complained that gyms will not release you from this obligation under any circumstances, even in cases of serious illness, redundancy or relocation. Other complaints relate to long notice periods for cancellation and disproportionately high cancellation penalties.

The OFT have focused on the following aspects of contracts for gym membership:

• Claims that gyms will not be liable for death or personal injury, or for loss or damage to property
• Lack of clarity concerning minimum membership periods and notice required for cancellation
• Lack of clarity concerning cancellation charges, or the consequences of cancellation
• Clubs permitting themselves to make changes to their service agreements with you

In addition, the OFT felt that many of the obligations and requirements of the consumer were hidden within complex legal language when they should have been more plainly and clearly expressed. And while gyms could be allowed to impose an initial 12 month minimum term, consumers should be in no doubt on reading the contract that this would be the case. What about long notice periods for cancellation? A three month period is commonly the length of time required, which may seem unfair as it then ties you into a further 3 monthly payments. The OFT recognise that gyms also need to protect themselves from sudden cancellation and don’t consider 3 months to be excessive where you have a ‘rolling’ membership (i.e. not a minimum term contract). However, as with the imposition of a minimum term, this must be plainly and clearly expressed in the contract.

So what is an unfair term and what just bad customer service? We have seen that some of the points above, although dubious are not necessarily unlawful. However, the following are are unfair terms and have been recognised as such as a result of the OFT’s investigation:

1. Limiting or excluding liability for death or injury, or for damage or theft of property (includes ‘at your own risk’ disclaimers)
2. Excluding liability for any breach of contract on the club’s part, even though you are obliged to fulfil your contractual obligations
3. Limiting your ability to take legal action against the club if they don’t comply with their contractual obligations
4. Excluding certain statutory rights such as your right to get a refund if the club is unhygeinic or unsafe
5. Financial penalties on cancellation, where this sum is disproportionately high. Loss of all monies paid in advance may also be unfair, where this cannot be justified by the gym
6. Allowing the gym to terminate or cancel the agreement without reasonable notice, legitimate cause (as per contract), and giving you the same rights.
7. An initial minimum term is permissible, but where this includes an automatic renewal to another fixed term, this is likely to be unfair. Similarly, automatic renewal without giving you reasonable opportunity to cancel is unfair.

In addition to the identification of unfair clauses, the OFT recognise that you may not have had the opportunity or the know how to read and fully understand the contract you are asked to sign. Consequently, contracts are required to be written in plain and intelligible language with a prominent warning that the member should read and understand the terms before signing them.

Take Care!

Despite the interest of the OFT, the situation still calls for buyer beware, and care should be taken before entering into such agreements. Bear in mind the following points, because there is no cooling off period!

• Take the time to read through the Ts and Cs. Take it away if necessary – it is your right to have reasonable opportunity to familiarise yourself with the contractual terms before signing.
• Take particular note of clauses in relation to tie-ins, notice periods and cancellation penalties. Do not mistake the notice period for cancellation with the length of the contract.
• If the contract contains clauses which refer to automatic membership renewal, ask for this to be removed, or make a note of the date by which you should inform them.
• By law, the contract must be presented in simple, jargon-free language. if you are unsure about anything ask for full clarification
• A contract is a two-way process. Don’t be afraid to ask certain clauses to be struck out if they seem unreasonable or you are not happy.
• Take extra care with introductory offers and special deals. Clubs may waive their joining fee but still charge you the equivalent as an ‘admin’ fee. Always read the small print.