How to claim your PPI compensation

The Financial Ombudsman Service (FOS) has confirmed there was a 10% jump in the number of complaints it received in the final three months of 2011, driven by a spike in complaints regarding Payment Protection Insurance (PPI).

The number of complaints centring on the controversial insurance rocketed from 19,259 in the preceding quarter to a whopping 30,301 – a jump of 57%!

PPI now represents 54% of the FOS workload, by a distance the biggest issue for the Ombudsman to deal with.

What is PPI?

PPI provides cover against missed repayments on credit cards, mortgages and loans in the case of accident, sickness or unemployment. It can be valuable cover – if you need it, that is.

The trouble is banks were covertly bundling PPI in with other credit products and flogging it at massively inflated prices to customers who didn’t really need it. At the height of the boom years it’s estimated that the banks were pocketing billions every year from the mis-selling of PPI.

How to claim PPI compensation

Banks were forced to review all past PPI sales following a High Court case last year, with £1 billion in compensation paid out by last October.

So if you think you’ve been mis-sold PPI, here’s how you go about claiming it.

First of all you need to complain to your PPI provider directly. If they try to drag their feet or do not give you a decision within eight weeks, then you’ll need to demand a ‘deadlock letter’, which you can then use to take your case to the FOS.

You’ll be asked to fill out a questionnaire detailing your case, covering things like when you took out the policy, whether you realised you were taking it out at the time, how you paid for the policy and whether you’ve ever attempted to make a claim.

The FOS will then determine whether you have a case, and look at whether you deserve some form of redress.

For more details, check out the FOS’s PPI centre.

Claims management firms

Each year the FOS notes just how many cases it deals with are represented by claims management firms. These firms charge to represent you, in some cases as much as 25% of any compensation you may receive.

But they don’t do anything you couldn’t do yourself, nor does using such a firm make it any more likely that you will be successful! For more on why you should give claims management firms a miss, check out Got a complaint? Avoid this rip-off!

More: Call for clampdown on bank overdraft charges | Cheapest ways to borrow this January