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The recent brouhaha about payment protection insurance has surprised consumers. Frankly, when we pay credit bills or loan payments, we don’t really pay attention to the charges that we are incurring. At the time of purchase too, the person who was selling us the mortgage or the credit card, assured us that these charges like PPI were essential. However, according to the latest news, PPI was not essential while taking your mortgage or your credit bills. You might have made the payments but the rules have changed. According to the UK courts, you can now claim those payments back and get your money back.
PPI or Payment Protection Insurance has been around for a long time now and it is actually quite a good policy. The policy states that in case you cannot make payments on your credit card or your loan, the insurance policy will kick in and cover those payments. For most consumers, this is a really great deal as they have to a pay a minimal amount for the PPI policy and the payment is removed from your monthly payments to the finance or the credit card. The policy is taken on at the time when you take on a credit card or a loan. This means that you are buying the Policy along with your Credit Card or loan. PPI usually covers the missed payments that you cannot afford to make for a finite period of time. The payments are made by the PPI insurance company directly to the loan company for about 12 months to about 18 months. After the PPI payment period, the borrower has to find another way to make his payments or he has to refinance his loan. For most people, this is a really great deal as it provides emergency cover during adverse times
The PPI is a very good insurance policy but it is not available for everyone. According to British Bankers Association, PPI cannot be provided to senior citizens, self-employed or part time workers and even to workers who were unemployed at the time of taking the loan or who knew that they were going to be unemployed very soon. However, unscrupulous lending agents and brokers misled borrowers and told many customers that is was necessary to take the insurance so that they could get approved for the loan. The policy was made mandatory to get a loan or a Credit Card. As a result, even customers who were not eligible for the loan were made to pay money to the credit agencies. Consumers did complain but no one actually noticed till the complaints were forwarded to the Financial Ombudsman and the UK courts. This led to a huge court case which went on for a year or more. Eventually, the court rulings were made in favour of the consumers and banks were directed to return the PPI payments made by consumers.
For most consumers, this is a godsend as they can actually reclaim all the Insurance payments that they made in the last decade. Actually saying, anyone who took a loan or a credit card from 1999 is eligible for a PPI claim. All you have to do is collect your credit card information and loan information. According to the RTI act or the Right to Information Act, banks have to let you know the different loans and cards that you have with them currently or in the past. You can use this information to find out how much money you paid to credit agencies as Insurance. Calculate the payments you made and write a letter to the bank to claim your money back. According to the courts, banks have to respond to you in about 60 days and pay back your PPI claim. If you aren’t sure how to calculate the amount, we suggest you use online PPI Calculator websites that will help you in calculating payments. Make sure that you are calculating PPI for each credit card or loan separately and add the current interest rate to the claims letter. See our reclaiming PPI in 6 easy steps guide here.