Quick guide for all you need to know about PPI claims

Today, 29/08/17 despite pressure from consumer groups, the Financial Conduct Authority confirmed that it will introduce a deadline for making new payment protection insurance (PPI) complaints. It is quite ridiculous that this deadline should be introduced, the only benefit is for the financial institutions! Although the FCA has told them to contact customers regarding PPI, many have failed to do so and the onus is on the consumer to contact the company.

Millions of us are contacted on a daily basis from Claims Management Companies trying to get their hands on a large percentage of what we may or may not be owed. But despite this, it is estimated that there are billions more to be claimed. In fact the FCA says that over half have yet to claim but has imposed this deadline. Claims have been made since 2011, that’s 6 years and yet they expect more than 6 years of claims to be made in two years? Plus the additional claims which have already been dealt with due to the Plevin case. That issue of 2 versus 6 years alone begs many questions! See the FCA figures for amounts claimed in each of the last 6 years.

What exactly is PPI?
Payment Protection Insurance. When you took out a loan or a mortgage or similar you may have been sold it alongside the agreement. It would, in theory pay out if you were unable to make the payments.

What makes a mis-sold PPI?
1) If you were told that you had to have it (you didn’t) to take out the loan
2) It has been added without your knowledge
3) Sold the wrong cover, e.g. something to which you didn’t agree, single policy instead of joint, you already had cover with another product/through work etc
4) If you were self, employed, retired or unemployed and were sold unemployment cover which would have been useless to you
5) You had pre existing medical conditions and the cover made you exempt
6) If your provider has already been fined for not acting fairly it is likely that you will have a case.

Supreme Court judgment in Plevin v Paragon Personal Finance Ltd (Plevin)
The Plevin decision means that consumers may have new grounds to complain about PPI regarding the amount of money that the providers received for the sale if the commission was undisclosed and made the relationship unfair.

Failure to disclose commission gave rise to an unfair relationship. Over 50% and firms should calculate redress as the excess commission over this 50%.

The FCA requires all firms to write to previously rejected complainants who are eligible to complain in light of Plevin in order to explain the new basis for complaining to them. Consumers with live PPI policies will now be able to complain after the deadline if they have a future claim on their policy rejected for reasons related to the sale. The complaint must be related to the reason the claim was rejected, for example, eligibility, exclusions or limitations.

Finding out if you had PPI
Look at all your loan agreements. See if there is any mention of PPI. Insurance, benefits, protection plan, etc. If so, look through and see if you think you were mis sold.  Although there are calls to make finance companies inform all customers of their PPI agreements, they aren’t doing so. If you can’t find the paperwork and don’t know if you had PPI, don’t despair! Write to the company and ask for a copy of your agreement. Ask for the terms and conditions which were relevant at the time as these may have changed and it’s what they were at the time of agreement that matters. You may have to pay £1 for existing accounts and £10 for closed accounts.

You can also check your credit history which will tell you of any accounts which were live in the last 6 years.

How to claim
Don’t use a Claims Management Company there really isn’t a need and they can’t do anything more than you but will take a hefty chunk of what you are owed. Write to the finance company giving the account details, and any other information such as when it was taken out, different address etc.

Explain how you believe you have been mis sold with as much evidence as possible to strengthen your case.

Should you not be satisfied with the decision you can take the matter to the Financial Ombudsman which is currently overturning 54% of cases in favour of the consumer.

More on the FCA website regarding claiming for PPI refunds

For help in most complaint scenarios see How To Complain: The ESSENTIAL Consumer Guide to Getting REFUNDS, Redress and RESULTS! for guidance, tips, advice, laws and template letters for all you need to know in getting redress!

Everything you need to know about Payday loans

In the first six month of 2016, complaints to the Financial Ombudsman about payday loans more than tripled to 4,186 compared to the previous six months. The Financial Ombudsman has said this is because borrowers have become more aware of their rights.

Debt camel guest post on The Complaining Cow

 

I don’t think many people understand their rights in this area, so I asked Sara Williams, who runs the Debt Camel advice website and who is also a Citizens Advice advisor, to explain what these complaints were about and what to do about them!

What is a payday loan?
A payday loan is very short term loan at a high rate of interest. A typical example is if you borrow £200 to be repaid the next time you are paid – hence the name “payday loans”. The interest rates on these loans can often be over 1,000% APR.  Sometimes the repayments can be spread over a few months.

The regulator says loans should be “affordable”
You might think that at those interest rates the loans obviously aren’t affordable, but the regulator’s definition looks at whether someone can afford to repay the loan without experiencing adverse consequences.

In other words, affordable credit can be repaid on time and still leave you able to pay all your bills and cover your normal household expenditure. If the only way you could repay a payday loan is by borrowing again, perhaps from the same lender, or by getting into more debt with another lender, or not paying the rent or a utility bills, that payday loan was not affordable.

These affordability rules have applied for a long while. The Financial Conduct Authority (FCA) introduced tighter rules for payday lending since 2014, including capping the interest, but the previous regulator, the Office of Fair Trading, had very similar rules on affordability.

In 2014 the FCA made Wonga give refunds and loan write-offs to many customers. This was the first time there was any publicity for the concept of affordability and payday lending.

The principle of affordability isn’t a special rule for payday loans. It applies to all lending, from bank loans to credit cards. But it tends to be easier to show a payday loan is unaffordable because the repayment amounts are so large, having to repay the full loan immediately, not just a small proportion each month.

Repeat borrowing is likely to be “unaffordable”
A lender can check for affordability in various ways, such as looking at your credit record and asking about your income and expenditure. But they should also take into account how much you have previously borrowed from them.

Payday loans are meant to be used when you have a temporary difficulty. If the lender can see that you have been repaying their loan and then borrowing again (or you kept extending the term by “rolling” the loan) for month after month then this doesn’t sound like a short term problem.

In this sort of situation that the Financial Ombudsman is often deciding that the lending was unaffordable and that the lender should have realised this after the first few loans. In a typical decision, the Ombudsman says that the interest paid on the unaffordable loans should be refunded, 8% statutory interest should be added and the loans should be deleted from your credit record.

How to complain
If you have borrowed from a payday lender and you think your loans were unaffordable, you should think about complaining to the lender.

Email is the best way to do this, so you have a record of what you have said and a date-stamp on it. I have published a list of emails to use for complaints to payday lenders.

Your complaint needs to tell your story, explaining why you feel the loans were unaffordable for you, and ask for a refund of interest paid. This doesn’t need to be complicated, you don’t need to quote laws or calculate the amount of a refund. If you would like to see an example template letter, there is one on my How to ask for a payday loan refund page.

Follow the Tips for complaining.

At the bottom of that page there are a lot of comments from people making these sorts of affordability complaints. It’s a good place to look if you want to get a feel for what sort of reply you may get from the lender and how long it might take.

If the lender says No or doesn’t reply
If you get a rejection from the lender, or you are offered an amount of money which seems very low compared to the amount of interest you paid, then have a think about your case.  If you just had one or two loans from the lender and you repaid them on time, it probably isn’t worth taking this any further.

But if you feel that you were caught in “the payday loan trap”, having to keep borrowing every month, or if you told the lender you were in difficulty and they ignored this, then take your case to the Financial Ombudsman. Also do this if you don’t get a reply within eight weeks – that is the time the Ombudsman says you have to allow the lender to resolve your complaint.

It’s easy to put in a complaint to the Financial Ombudsman – you can do it online or over the phone.  The process isn’t speedy, it will usually take a few weeks for someone called an adjudicator to start looking at your complaint. It can take several months if the payday lender is slow about replying to questions from the adjudicator. Most complaints are settled by the adjudicator, with both sides agreeing, but some go to the second stage where they are looked at by an Ombudsman.

The Financial Ombudsman publishes anonymous details of some complaints which you can look up if you would like to see more about the cases that are being considered.

Payday lender regulation has improved
After the FCA became the regulator for payday lenders, it introduced important protections:

  • from July 2014, lenders were not allowed to “roll” a loan more than twice;
  • new restrictions on their ability to take money directly from someone bank account via Continuous Payment Authorities; and
  • from January 2015, the cost of payday loans was capped at a maximum of 0.8% per day and a total cost cap of 100% to protect borrowers from escalating debts.

These measures have removed many of the worst excesses of the payday loan market in Britain. They have also had the desirable side effect of making some of the least scrupulous lenders decide to exit the market.

But although standards have improved a lot, the Citizens Advice report Payday loans after the cap – Are consumers getting a better deal? in August 2016 found that many payday lenders are still not conducting proper affordability checks. And borrowers who didn’t have an affordability check were nearly twice as likely to have trouble repaying their loan as those who remembered being asked about their ability to repay.

Adequate affordability checks are an essential safeguard for borrowers. It is good that the Financial Ombudsman is recognising this and giving redress to people who were caught in the payday loan trap.

For advice, guidance, tips, consumer rights and laws on other areas for consumer  GET THE BOOK! How To Complain: The ESSENTIAL Consumer Guide to Getting REFUNDS, Redress and RESULTS!

 

Who else wants to get back those bank charges?

Banks & building societies
Banks can charge you, should you go into the red. However it is worth complaining if you feel that it is unfair, for example if it was only for a couple of days and you transferred money as soon as you realised. I have done this a few times over the last 25 years. It has always worked. The only time it didn’t work first time was a couple of years ago and I then wrote to the CEO outlining my loyalty as a customer and I then got the money refunded.

moneyRemember that the bank does not have to give you this amount, I just feel the charges do not reflect anything like the extra administrative time the matter might take. The ease with which I have had the charge refunded in the past I believe shows that if you are seen to make the effort that will be acknowledged. My examples were all genuine mistakes where I had forgotten something leaving the account or, had miscalculated! Don’t be afraid to admit to making a mistake as this also goes a long way to a friendly customer services representative being understanding.

Banks don’t pay out refunds of charges as easily as they used to, but they are obliged to treat customers fairly so it is worth writing to complain. You can go back 6 years. Unlikely that you have the statements but you can look online at your account for information or you can request a list of transactions for the last 6 years. Don’t ask for statements as the bank could charge you £10 per statement!

If you are in financial hardship, complain about more than one unfair charge over the years and threaten to take the matter to the Financial Ombudsman it is quite possible that you will receive a goodwill gesture. All cases where the Financial Ombudsman thinks treatment has been unfair will be looked at and the service is free so it is worth going further.

Generally speaking if the charge exceeds the amount you are overdrawn or you get stuck in debt because of the cycle of continuous charges you could take the matter to the Financial Ombudsman.

In response to your complaint banks could:

Refund in full.

Refund in part. Banks should deal with your case sympathetically so if you feel that the offer is not fair, contact the bank again with an amount that you think is more appropriate and negotiate.

Ask you to fill out a form. The bank may want more information regarding your financial hardship. In this case fill out as fully as possible and return speedily as this shows that you are serious.

Require the refund be used to pay off debt. If it was just the one charge it is likely that the bank will just refund the amount into the account. However, if you are claiming for the past 6 years it may be a figure into hundreds of pounds. If your account is in debt you should accept this offer. However, if you have other debts such as utility bills or mortgage arrears incurring higher charges contact the bank and explain  the situation.

Reject but offer to help in other ways. The bank may accept that you are in financial difficulties but not offer to refund the charges, choosing to do something else such as not making charges for the following 6 months or offering a repayment plan. You could accept this offer, but if you are not happy then write again.

Reject out of hand. The bank may completely reject your request. Some banks may do this automatically for all claims as a matter of policy as many people will not pursue the matter. In this situation write again (I’d go to the CEO at this point) explaining your disappointment with the decision and threaten to take the matter to the Financial Ombudsman. If the claim is rejected again then proceed with the Financial Ombudsman. You have nothing to lose.

For more information and advice on complaining about financial institutions and others and template letters see How to Complain: The Essential Consumer Guide to Getting Refunds, Redress and Results!

Alternative Dispute Resolution: What it all means

Alternative Dispute Resolution

From the 9th July 2015 The EU ADR Directive was supposed to come into force. It was delayed until the 1st October. This compels the government to ensure that ADR schemes are in place.

ADR is a process that enables disputes between a consumer and a business to be settled via an independent mechanism outside the court system and can provide a quicker resolution. There are different forms of ADR:

Arbitration – an impartial and independent third party will decide how to resolve your dispute. In most cases, the arbitrator’s decision is binding and cannot be challenged in court. Costs vary and sometimes arbitration is free as with IDRS and ACAS services.

Adjudication – by ombudsmen (or ADR provider) and free to the consumer. Binding on the trader (they lose membership if don’t abide by the rules but this rare) but not on you should you not agree and want to take the matter to court.

Mediation/conciliation – remains confidential and cannot be used in a later court hearing. The cost varies: in some instances it’s free; in others, it can get expensive. By the very nature of the word “mediation” someone will work with you and the other party to reach a decision. If agreement is made and signed this is legally binding. You would only be to go to court to enforce it if necessary.

Negotiation – which is used most commonly in employment situations. You can choose to have a union rep or someone else present while you negotiate.

Generally, arbitration is binding on both parties to the dispute; mediation/conciliation and negotiation are non-binding; and adjudication and ombudsmen schemes do not bind the complainant, but will be binding on the other side.

There’s a guest post from the Financial Ombudsman.

Furniture and dispute resolution guest post.

The ADR appears to have let the flood gates open and the potential for an omnishambles of ombudsmen is upon us.

Film recorded for Citizen’s Advice:

Why use the Financial Ombudsman?

I’ve used the Financial Ombudsman a couple of times and obviously both times he found in my favour! Both times were Halifax too! Here, Patrick Hurley, Director of General Casework describes why and at what point you should contact the Financial Ombudsman.

Patrick Hurley Director of general casework
Patrick Hurley Director of General Casework

People often ask, what does the ombudsman service stand for? There’s a potentially long answer to that. But I think the short answer and the right answer is fairness.

But what is fairness? It’s not always easy to define; it can differ according to culture, the situation you’re in or your personal values. However, it’s a near certainty that all of us, at some point, will be subject to that clear sense of outrage that something unfair has been done to us.

The science behind this is as complex as the feeling itself. The part of our brain that assesses fairness is linked to the same section that registers disgrace and disgust. We’re emotionally programmed to react with strong negative feelings at the thought of injustice whereas we experience a more positive, settled response to what we perceive as being fair treatment.

Explaining an emotional reaction when there is something obviously unfair is easy. For instance, if someone were to take £500 from you for no reason and then refuse to give it back. There’s one clear act of wrong doing, a loss that can be quantified and a straightforward way to make things fair again. This is a situation where those three words we’ve all used at some time “That’s not fair” clearly apply …and most people would agree.

But what if the thing that triggered the emotional reaction isn’t as clear cut as that? What if it’s something you can’t quite put your finger on? Or a culmination of things over the course of several months that has left you with that sense of outrage? Or there’s simply been poor service?  Trying to explain why something that to most people is a relatively small incident is in fact a “final straw” moment for you can be tough. It can be even more difficult if there isn’t really a clear resolution you can point to – you just want it putting right.

When this happens, many people don’t always know where to turn and the temptation can be to give up. That’s what people tell me when I ask them why they haven’t used the ombudsman all too often – particularly from people who didn’t want to complain as it was over something ‘small’. Yet that’s exactly what we’re here for.

We are here to look at problems about fairness in money matters as a whole – big and small. Everything from the loss of £150,000, to a person being inconvenienced by poor service such as bank statements being sent to the wrong address, that ‘final straw moment’ where you find yourself having the same conversation asking the bank to sort out the same problem, and lots in between.

People also often worry that it’ll be a really complicated process to come to us and the business they are complaining about might turn on them. Just to reassure you, this should never happen. All you need to do is give us a call us, go through what happened in your own words and we’ll take it from there. Yes there are some rules but we’ll talk you through them in plain English.  That’s essentially our process.

So, my final words would be these; the next time you get a gut feeling that something’s not right, don’t write it off. Even if it takes you a while to explain the circumstances that led you to your “it’s not fair” moment, call us.  It can be about a lot of money, a little, or even just a point of principle.  And often the people we help simply want an apology or an explanation. Of course, we won’t always find that something wrong has happened, but we will let you know what we think. Either way, the ombudsman can help you work through what the problem actually is and figure out what can be done to make things right again.

You can find further information on the Financial Ombudsman on their website here.

How to Complain: The Essential Consumer Guide to Getting Refunds, Redress and Results!

 

Before you go to the Financial Ombudsman do follow these tips when you complain and for more information, guidance, consumer laws, rights and templates for complaining about just about anything in most sectors GET THE BOOK! How To Complain: The ESSENTIAL Consumer Guide to Getting REFUNDS, Redress and RESULTS!