Reclaimed PPI? Banks are Underpaying
It is very likely that you are owed £100s or more if Barclays, Lloyds or RBS/NatWest have offered payment protection insurance (PPI) redress on any loan that you might have taken since 2012.
As the PPI scam unfolded it was discovered that big banks sometimes underpaid by almost a third. This basically means that people who have been repaid already are due £100s or £1,000s more.
In order to be compensated properly, here is what you will need to know.
Who is more prone to be affected?
PPI reclaims is mainly for people who have availed loans from 2012 onwards and those primarily affected by this are customers of Lloyds Banking Group and Barclays which also includes Black Horse and Halifax and the RBS Group which comprises of NatWest, although it can consist others as well.
All those who were affected will also chiefly be borrowers who received a PPI offer from the bank and did not go through the Financial Ombudsman Services.
The providers of these services are well within their rights to offer comparative redress which are stated under the Financial Conduct Authority's (FCA) rules, as long as they go on about it “fairly” and constantly.
Understanding the Problem?
Some people could only receive partial funds because of the lenders reasoning that they were sold the “wrong type” of PPI instead of the “completely mis-sold” PPI. In such cases, lenders offered borrowers with ‘comparative redress’, also known as ‘alternative redress’ which is essentially a partial payment for those who had to pay all the PPI upfront (known as single premium) rather than charged on a monthly basis.
This basically means, on a loan of £5,000 if the full PPI refund is around £1,200, the comparative redress will take away around £500 away from your offer, leaving you with a refund of £700.
Reclaiming PPI in the First Place
If you have ever availed any type of loan or owned a credit card, check to see if you were mis-sold PPI. One of the most common complaints is that consumers were told that they had to necessarily purchase a policy from the same provider as the loan in order to be eligible for the product. This is blatant mis-selling.
What do the banks have to say on the matter?
Barclays claims that it paid comparative redress in less than 5% of claims of PPI claims and that it aims to put into practice the FCA's guidance acceptably rather than being motivated financially.
The FCA handbook is absolutely clear that in these specific circumstances, the provider must offer redress that places the customer in the position they would have been in had the customer availed the regular premium policy.
Additionally, the numbers for overturn rates can potentially be misleading. The overturn rate for loans claims is similar whether it is for comparative redress or for any other reason.
Majority of the providers following the FCA guidelines use comparative redress in minority cases which are in line with the criteria laid down by the FCA in Policy Statement 10/12.