Reader's question: I recently had a cold call from one of those PPI firms [claims management companies that say they can get your money back for you if you were mis-sold payment protection insurance on a loan]. I had some credit cards a few years ago and also a couple of personal loans but, as far as I can recall, if ever I had PPI I knew what I was buying and was happy with the deal. However, the fellow on the phone was very persuasive, and it was as much to get him to go away that I gave him my details and said he could put together a case for me to claim compensation for mis-selling.
To cut a long story short, the claims company fired off a few letters and got a flea in its ear from most of the lenders. However, one said that, since the records that they had about me were incomplete, they would send me several hundred pounds in compensation.
I’m not sure what to do now. I don’t really think that I was mis-sold, but the firm is now offering me a load of cash and the claims company says that, since they work on a commission basis, if I don’t accept the money they will still bill me for the 30% of the amount I’ve been offered, which is the deal I signed up to. I feel very uncomfortable about the whole thing and wish I’d never answered the phone.
Annie Shaw replies: The blunt answer is that if you aren’t entitled to the money you shouldn’t take it. If that means you are breaching a contract with the claims firm and will need to pay them out of our own pocket, then that’s what you should do.
However, the issue isn’t as simple as that. You say that you were happy with any insurance that you purchased. Did you ever claim on the policy and if not, would you have been able to? Some of the case for mis-selling is that the insurance was bundled in with other products so people had to take it out as a condition of getting the loan. In these cases they might not even have known they had bought it. Even if they were aware of the policy and apparently happy with it when they bought it, when they came to claim they could have found that they were ineligible because of an exclusion clause in the terms.
Even though you believed you were happy with your policy, it could still be the case that it was mis-sold.
The lender says it will pay you compensation because its records are incomplete and can’t prove that you weren’t mis-sold. They have to do this because the rules say that financial firms must treat you fairly and offer you products that are suitable for your needs. It’s not up to you to prove that they aren’t. The company has therefore left itself at risk of compensation claims as a result of sloppy record-keeping.
It probably feels it is cheaper to make you an offer than face the possibility of you going to the Ombudsman, or – even worse for them – to court.
It is ultimately going to be up to you whether you accept the compensation money. I am sure many readers will take the view that the banks have been robbing their customers blind for years and they richly deserve customers getting their own back, even if the justification is a little dubious. I’m not prepared to make a call on what you should do but I couldn’t blame you if you took the easy option.
For anyone else considering making a PPI mis-selling claim, avoid claims management companies that will take a percentage of your compensation money.
Use the Financial Ombudsman Service guide to pursue your claim yourself. Filling in the forms should only take a minute or two and you get to keep all the cash if you are due any.
* Read Annie Shaw's money articles every month in Saga Magazine.