Unless you have somehow managed to avoid all media for the last few years, it would be hard to have missed the PPI scandal. Far from being a specialist financial story that only people with an interest in this particular field would follow, it has turned into an event that caught the attention of the entire country, and has led to millions of people taking more of an interest in their financial affairs than ever before.
More and more individuals have now taken personal responsibility to familiarize themselves with a whole new range of concepts that they were not previously even aware of, in order to make sure that they benefit from this potentially very rewarding situation.
With so much talk and information out there, it can be difficult to cut through the noise and get to the point. Specifically, what exactly does this mean to you and what should you be doing about it?
What happened exactly?
- Mis-selling. The issue began with banks selling PPI to their customers, and specifically how they were doing it. Once these organizations realized how lucrative these policies could be, their approach became more aggressive. Questionable sales techniques were introduced and many customers found themselves purchasing the policies they would not necessarily have bought under normal circumstances. In some incidences, people were not even fully aware that they had much such a purchase. In others, they knew they had bought a policy but it had not been made clear to them that there may have been more suitable alternatives. There were also situations where people were led to believe that their application for a particular product, such as a mortgage or loan, would fail if they did not also purchase PPI.
- Following the potentially widespread mis-selling of PPI in the 1990s, complaints began to increase. These complaints caught the attention of the media and a range of newspapers began to report just how profitable these policies had been for the banks. This prompted various parties, including Vince Cable, who was Treasury spokesman at the time, Citizens Advice and Which? to apply pressure and make increasing demands for investigations. In 2005, the Financial Services Authority (FSA) identified PPI as one of its priorities and began imposing fines for mis-selling in 2006. This coincided with more and more consumers making claims for compensation from the organizations from which they had purchased financial products, as they realized they had strong cases as long as they could show they had never made a claim against their policy.
- To start with, many banks reacted by rejecting pretty much all compensation claims. The situation started to change when it was highlighted that the majority of claims that were then taken on appeal to the industry ombudsman went in favor of the customer. In 2011 the FSA brought in a new regime for PPI sales that required providers to, among other things, specify to customers that PPI was an optional extra. While the industry argued that it was unfair to impose these regulations retrospectively, they failed to convince the courts of this and suddenly consumers found that the playing field had shifted massively in their favor. Banks were forced to re-open thousands of claims for mis-selling and look into their records in detail to identify customers who were entitled to compensation as a result. Since then, rather than continue the fight, banks have broadly speaking accepted the situation and put aside enormous amounts of money to compensate customers.
The number of claims has skyrocketed as the profile of the scandal as increased, and more and more people have made a claim as a result. There are still significant numbers of people who were mis-sold PPI and are therefore eligible to claim, but are either not aware of the fact or unaware about how to go about doing so.
Making a Claim
There are a number of steps that must be followed in order to make a claim for a PPI refund, and contacting dedicated experts to help you deal with a Northern Rock PPI Claim can be an incredibly helpful move in guiding you through these steps.
- Step 1. First, and most importantly, establish whether you have purchased PPI. You can do this by taking a careful look at any financial products you currently hold, or have held in the past. This is much easier to do if you are the kind of person who keeps detailed financial records, but that is by no means essential
- Step 2. If you do not still have detailed records, any organization from which you have purchased financial products, such as a mortgage, credit card or loan, must cooperate by advising you if PPI was included.
- Step 3. Clarify why exactly you feel the PPI was mis-sold to you. For example, you may have been advised that your application for a financial product would be declined if you did not take out PPI with it, or perhaps it was bolted on to the project as part of an overall package without this being fully explained to you.
- Step 4. Complete your application with as much detail and clarity as you are able to provide and submit it to the organization in question.
- Step 5. In some cases, the claim may be rejected, in which case there is an appeals process to follow. Preparing carefully, and ensuring you fully understand, and then articulating the case behind your claim can avoid this.
If your claim is successful you may be entitled not only to a full refund, but interest charge and compensation interest as well.
Your Opportunity
It can seem confusing, and perhaps a bit daunting, to look too deeply into the world of finance. Even your own finances can seem too difficult to spend too much time on. It is tempting therefore to simply turn your back on such an opportunity and dismiss it as too much trouble. This would be a mistake as the rewards are potentially significant. All it takes is a bit of research, including speaking to the right people, to make sure you receive what you are due.