Credit Card PPI Reclaiming �1,000s for mis-sold insurance

If you have a credit or store card or had one in the last six years, you could reclaim �1,000s. Expensive payment protection insurance (PPI) has been widely mis-sold with big lenders such as Egg & Capital One having been hit with huge fines.

Thousands have been mis-sold policies, for example, old agreements with pre-ticked boxes or store cards that were sold by someone with no financial background. Use our step-by-step guide to reclaiming, plus free templates, to find out if you can claim.

Looking for Loan PPI? See PPI Reclaiming Guide

While every effort's been made to ensure this article's accuracy, it doesn't constitute legal advice tailored to your individual circumstances. If you act on it, you acknowledge that you do so at your own risk. We can't assume responsibility and don't accept liability for any damage or loss which may arise as a result of your reliance upon it.

Get �1,000s back on mis-sold credit card PPI

The UK's biggest protection racket isn't run by thugs in back alleys, but the genteel staff of Britain's banks. For years they've been stealing �1,000s, but now you can get your money back.

If you've a credit or store card, urgently check whether it included insurance, If so, you could be paying �1,000s for potentially worthless cover, without knowing about it.

The PPI industry has never been in so much trouble; millions of people have been mis-sold and while we've been campaigning on it for years, finally the regulators have caught up. Find out more

Some inspiration before you begin

If you've been mis-sold you CAN get the money back � there have been thousands of successes and since the hold was lifted in May 2011 we've seen them coming through quicker. Here are just a few for inspiration, see PPI Successes for more (and as things will develop over time, please report yours and give us feedback that we can keep our article up to date):

How does credit card PPI work?

If you've taken out a credit or store card, it's likely you would have been offered payment protection insurance (PPI) with it. This is a form of insurance designed to cover your credit or store car repayments for a year in the event of an accident, sickness or unemployment.

Payment protection insurance (PPI) itself isn't a bad product. But it's been widely mis-sold with thousands of cards, leaving many paying hundreds for potentially worthless cover. If this applies to you, you may be able to reclaim what you've paid.

It's a common misconception that PPI protects you if you lose your card, but that's something different, known as a card protection scheme. PPI's there just to cover repayments if you're ill or unemployed, and usually only pays for a year.

How much is a typical credit card PPI payment?

Generally, the amount you pay for credit card PPI is about �10 per year for each �100 of your outstanding balance. It doesn't sound much, but over time it quickly mounts. On a �4,000 debt you'd pay �400 a year for PPI � after four years, that's a whopping �1,600. See more detail in the 'How much will you get back?' section below.

Why is PPI mis-sold so often?

There are some 20 million PPI policies in the UK, generating about �5 billion a year for the companies involved. The insurance cost almost always dwarves the interest, so it's hardly surprising many believe this is the most overpriced financial product around.

Sales staff dressed up as advisers were hugely incentivised to push these products whenever possible; and many were under so much pressure they strayed far from the truth. Worse still, in June 08, after a 15 month investigation into PPI, the Competition Commission found the following average payouts:

• Car Insurance: 78%
• Home Insurance: 54%
• Mortgage PPI: 28%
• Personal Loan PPI: 15%
• Credit Card PPI: 11%

Simply put, this means ...

For every �100 insurers take on car insurance, they pay out �78 -
but on credit card PPI they pay out just �11, meaning it is HUGELY profitable.

Most of this profit goes to the lenders, not the insurance companies. The only silver lining to all this? It means mis-selling cases are easier to win. See the success stories above for inspiration.

If you think you've got a good case, RECLAIM!

It's well worth reclaiming if you think you've been mis-sold; plus, if you've been mis-sold PPI with a substantial long-standing card debt, you could get �1,000s back.

How it may have been mis-sold?

How easy your reclaim is likely to be depends on how you signed up originally:

If you bought online ...

Nowadays, many apply for credit cards online, by post, or by filling in a leaflet. If you signed up for your credit card on the internet, reclaiming's more difficult as the full terms are usually available there, and the onus was on you to have understood them.

But there's an important exception. If you signed up with a provider that was using pre-ticked boxes, you may have had to opt out of the insurance rather than opt in.

In July 07, all lenders agreed to stop doing this, but if you took out a card before this date, check urgently � you may have bought insurance without knowing.

If you bought face-to-face or on the phone ...

Here, the salesperson is responsible to ensure you both understood the terms of any PPI and that the policy was appropriate; this also applies if you took out the policy online but were later called about the insurance, as often happened. This form of mis-selling has often been systematic, with staff being forced to sell policies or face lower pay.

You may've been told insurance was compulsory � it isn't, and that alone counts as mis-selling. Plus, the self-employed, unemployed, retired, those with pre-existing conditions, or who are covered elsewhere, have all commonly been flogged unnecessary policies.

So if you've got a case, write and complain but ASSUME you'll be rejected. Although it's less likely at the moment, no matter what your lender says, don't bat an eyelid and just keep going. To reclaim, you'll need to write up to three letters (templates for all of them are here); the last being to the free Ombudsman service, though there's a chance you could get a payout sooner.

As all of this is free, the worst case scenario by reclaiming is ... you lose the cost of three stamps.

Starting your claim FAQ

Step-by-step reclaiming

If you think you may be a victim of credit card PPI mis-selling, follow this step-by-step guide:

Step 1. Check your policy

Before starting, it's important to see if your claim is valid:

Have you already claimed on the insurance?

Until January 2010 it had been generally assumed you couldn't make a mis0selling complaint if you'd already made a successful insurance claim. Yet proposals from the regulator now mean more people could be entitled to compensation.

Anyone who has claimed on a PPI policy can still submit a mis0selling complaint, using the timeframes above, though the chances of success are unclear. However, even if you're not successful, you may be able to cancel your insurance.

Get the right paperwork

If you think your claim's likely to be valid, it's now time to make sure you've got the right paperwork for your needs:

Not got your paperwork?

If you can't find your agreement or T&Cs;, contact your lender to ask for a copy (make sure T&Cs; date back to the time of your agreement as terms will change over time).

Lenders can ask for �1 to provide this but not all do so you could include a �1 cheque (don't send cash, though) to speed it up a little. It may not provide the agreement if your account is closed but you can then ask for a full breakdown of your whole account (this can cost �10).

Want to calculate how much you may be owed?

Step 2. The PPI reclaiming checklist

Now it's time to go through the checklist below. Sellers of PPI have a responsibility to ensure you understand the nature of the product, and that it's appropriate for you. All policies will have exclusions, and you should have been told about them. As most policies are bought alongside a financial product rather than on their own, the key issue is:

.. what was said at the point you were sold the product.

Here are the key mis-selling categories. If you fit one or more of these you probably have a case:

Step 3. Write to your lender

This is all about following a dance. Most people with a decent claim get a payout, but very few get it after the first complaint. Companies deliberately try to put people off with rejections - some are now saying complaints are on hold - and sadly, they often succeed. Yet follow all the steps through and you should improve your chances.

Reclaiming almost certainly means your insurance will be cancelled, as you're effectively saying it isn't suitable for your needs - only start the process if you definitely want your insurance to come to an end.

It's important to understand you're writing to your bank but may also need to go to the Ombudsman:

You should contact the company that sold you the policy and ask for a refund. If the seller was acting as an 'appointed representative' of the insurance provider, it may tell you to contact the provider instead. Use the address of the branch you visited for your first contact; any follow up can be sent on if necessary.

It's worth checking whether the company was regulated by the FSA at the time of your sale. If either the card company or the seller were, it's best to contact them first, as you'll be able to go to the Ombudsman for help further down the line if needed.

If a company isn't registered, you don't need to complete the questionnaire, but it will help ensure you provide the full details of your claim and will be needed if you're able to use the Ombudsman later on, so doing it now could save time.

Complete the questionnaire

In March 2010 the banks and the Financial Ombudsman agreed on a questionnaire, covering all details on the sale of a policy, which consumers should use to make their initial complaint.

PPI Reclaiming Questionnaire: Word or PDF versions

It's quite simple to fill in, as you don't have to give your whole life story (the fact you're making a complaint means the provider needs to investigate if you were missold as well as look at whether any previous claims you've made should have been paid), though do take care.

To help, we've written a guide which takes you through the form step by step. It's written in Microsoft Word so you can easily cut and paste sections or have it next to you as you fill in the Ombudsman form. If you're still having problems filling it in, call the Ombudsman on 08000 234 5679 (0300 1239 123 from a mobile).

The most important thing to understand is that in most cases until now...

A company's first reaction has often been to reject complaints. Yet this doesn't mean you've no case - it's just a tactic.

This isn't about rights and wrongs, it's about commerce. It's far cheaper to say no, produce a legalese argument to befuddle you and hope you'll cower in a corner. So expect to be rejected - and don't be put off.

It's not just us saying that - even the Financial Ombudsman formally complained to the regulator that some lenders were "deliberately trying to obstruct the Ombudsman process" (see Ombudsman news). This is done as a way to prevent people who lack the determination to pursue the claims. So you must go into this expecting rejection at this stage, and understand it's just part of the process.

Was your complaint put on hold?

In Oct 2010 the banking trade body, the British Bankers' Association (BBA), decided to take legal action against the FSA's plans to compensate victims of mis-sold PPI. Within a few days many lenders announced they would hold all complaints during this process, even though this is against regulatory complaint guidelines.

However, in April 2011 the High Court ruled in favour of mis-sold consumers, and the banks eventually accepted the verdict. In addition, Barclays said it will pay-out, no questions asked, anyone whose case was put on hold on or before 20 April 2011. See the Barclays to settle on-hold PPI complaints MSE News story for full info.

As soon as the hold was lifted the number of cases being processed quickly jumped and many consumers were told they'd won their case but the money didn't materialise for several months.

Banks say they are trying to process claims in 28 days but it could take eight to twelve weeks for you to get your cash. You'll receive interest on your payment up to the date it was issued, but if you feel the delay is unreasonable there is nothing stopping you contacting the bank to say you're not happy and asking for extra cash to compensate for the distress andinconvenience.

Might you have to pay back the tax on your payout?

PPI payouts are usually formed of three elements: A refund of the premiums paid, interest you have paid on the premium and additional interest on the compensation at 8% per annum. Although it's rare for credit card claims, if you receive the final element as part of your payment you may need to pay a small amount of tax to the government.

This is because, had you not paid out the PPI premiums it is assumed you'd have that cash in the bank and earned interest on it, which would then be taxed. If you received interest it would have been split out from the compensation on your refund letter. Any amount received in the last six years is liable for tax.

A basic rate taxpayer (who pays 20% tax), for instance, could pay around �40 for a reclaim of around �1,000. Of the major banks, only RBS and Natwest deduct tax. Barclays (including Barclaycard), Halifax, HSBC, Lloyds TSB and Santander do not deduct tax and you should organise a payment yourself by contacting your tax office or calling its income tax helpline on 0845 300 0627.

Step 4. Write to the Ombudsman

If you still haven't reached a satisfactory conclusion over your store or credit card PPI case, it's time to make a formal complaint to the Financial Ombudsman Service.

This is the official independent service for settling disputes between financial companies and their customers. The Ombudsman is completely free to use, and will adjudicate on whether your claim should be paid out.

It'll decide whether your policy was sold unfairly or unreasonably. It can only do so once eight weeks have passed from the date of your first complaint letter (between June and Dec 2011 this was extended to 12 weeks), unless the card company puts your complaint on hold and it specifically suggests you go to the Ombudsman (although this should no longer by happening).

While the process of using the Ombudsman is simple, and the amount of money you could receive is massive, it's not usually quick. Your case may take over a year to be settled so don't count on the cash now.

How to make a complaint

Just contact the Ombudsman and ask it to take on your case. You can either do this via the Financial Ombudsman Service website or by calling 08000 234 5679 (or 0300 123 9123 from a mobile). It will look at each case individually, so if yours is a matter of you saying one thing happened but the company disagrees, the Ombudsman will decide if it thinks the company acted fairly.

As the party with responsibility to provide full details of the insurance, the card company is expected to have more evidence on what happened to back up its case.

Last year, of the cases that needed to go as far as the Ombudsman, two thirds were awarded in consumers' favour. And even if yours isn't, there is no penalty for losing - it just means you don't get the money back.

Help with filling in the form

After contacting it, you'll need to explain your complaint - fill in and sign a copy of its complaint form and enclose copies of any paperwork that backs up your case.

Ombudsman Complaint Form: Word version or PDF version

Again, it's quite simple to fill in, though do take care. To help we've written a guide which takes you through the form step by step. It's written in Microsoft Word so you can easily cut and paste sections or print it and have it next to you as you're filling in the Ombudsman form.

The Ombudsman will then send you a confirmation letter to say it'll look into your case and get back to you if it needs any more information.

Sometimes this will take a long time, usually around six months but maybe even up to a year as the Ombudsman is dealing with huge numbers of complaints, but don't worry - you can then leave the matter to the Ombudsman to resolve and it will contact you with any offers from your card company.

If you think the Ombudsman wrongly turned you down

The Ombudsman's decision is usually made by an assigned case worker, but if you disagree with the result you can ask for a formal decision to be made by one of the 41 actual Ombudsmen at the service. This usually takes several months as it involves a detailed investigation into your case, but don't be afraid to push your claim further if you think the initial decision isn't right.

After that, while the finance company must accept the Ombudsman's decision, you still have the right to take the company to court - see the 'Use a claims handling firm?' section below. It's also worth noting that if you feel the Ombudsman hasn't handled your case correctly, eg, there have been unnecessary delays, you can refer it to the Ombudsman's Service Review Team.

If that doesn't resolve it you've a right to go to the Independent Assessor, though this is only about quality of service, not the actual decision made. For other complaints the Ombudsman can help with, see the Financial Fight Back guide.

When will easy route not work?

The Financial Ombudsman Service can only help with complaints about companies regulated by the FSA. While all PPI sales from January 2005 are regulated by the Ombudsman, some policies before that aren't.

Any provider that was fully regulated by the FSA prior to January 2005 will be covered by the Ombudsman. So all bank and building society credit cards should be fine.

Yet if you got the product in 2004 or earlier, and the provider wasn't covered by the FSA before that, the Ombudsman sadly has no jurisdiction. But always call the Ombudsman and check first.

This does make getting a payout more difficult, though it's still worth following it through. Please report your experiences in the PPI Non-Ombudsman Reclaiming forum discussion.

Should you use a claims handler?

We don't normally believe in using claims handlers, as reclaiming is easy and they just unnecessarily pilfer your cash. Yet for more complicated reclaims - like pre-2005 ones - or if you would struggle to do it yourself (local Citizens Advice Bureau may be able to help if you have literacy or mental health problems), the DIY route may no longer be appropriate.

Loads of companies now offer PPI reclaiming services - you've probably received cold calls, texts or seen the adverts. Many have just jumped on the bandwagon and should be avoided - they take a chunk of the proceeds, when it's usually relatively easy to do using the free letters.

If you're considering this route, before doing anything else, use our quick 'Should you use a claims handler?' tool below, as the vast likelihood is you can do it cheaper yourself.

Going to use a claims handler anyway?

If you're intent on using a claims handler regardless, then it's imperative you do the right checks. Use our 'What to check when picking claims handlers checklist'.

Possible alternative: Use a lawyer to take it to court yourself

An alternative is to find yourself a local lawyer willing to take the case on, or a no-win no-fee legal firm (some claims handlers link with or use them).

After all, from this point on it's likely to get litigious so a lawyer should help. In fact, a legal letter may make a company with a flimsy argument settle quite easily.

Yet if you are going to hire a lawyer, ensure you discuss the fees beforehand and compare it to the maximum you can reclaim.

Taking court action

If you've tried a claim through a trade organisation and it won't help, there's always the option of taking court action against the PPI provider via the small claims system. The claim is generally on the grounds that it's misrepresented your contract (and therefore made it invalid) if it didn't give you the full facts about the product or ask for all the required information.

This can actually be quicker than using the Ombudsman but will involve costs, eg, �50 for smaller claims, up to �300ish for larger reclaims - although you will get these back if you win - and there's always the risk you'll have to argue it in court.

If you have good grounds, and understand the legal arguments, then do consider it. There's a good chance it will force the PPI company to settle, but there are no guarantees.

For further details on how to take county court action see the taking court action section of the How to complain guide. If you give it a try please let us know how you've got on in the successes and failures forum thread.

Please feedback your experiences!

Things will continue to develop over time. Please give us feedback so that we can keep our article up to date and help as many people as possible by reporting your credit and store card PPI successes and failures in our forum - all feedback is useful for other MoneySavers.