Payment Protection Insurance (PPI) is a financial product which
is designed to cover repayments of your debts if you suddenly
become unable to work because of illness or losing your job.
PPI is a good concept in itself, but the way that it is
forcefully sold often leaves consumers unhappy and financially
damaged. Financial advisors that sell PPI have been heavily
criticised for using unreasonable and dishonest tactics to force
consumers to take out a PPI policy even when it is not even
needed.
If you believe this has happened to you then you may have been
mis-sold PPI and it would be worth your while making a claim
against the company that mis-sold you the PPI and get a refund.
The law and FSA
The rules which companies need to follow when selling PPI are
set out by the statutory regulator of the insurance industry; the
Financial services Authority (FSA). The rules are in the FSA
regulatory handbook are known as the Insurance Conduct of Business
Standards or ICOBS for short.
The Financial Services and Markets Act 2000 states that
a breach of the FSA regulations are actionable at the suit of
private individuals. In other words, anyone who believes that they
have suffered as a result of a PPI company who have breached the
FSA rules will be able to take legal action against the PPI
company.
Negotiating with the PPI company
The process in making a claim for mis-sold PPI is to attempt to
resolve the issue directly with the company that mis-sold the PPI.
Because the FSA rules require every authorised financial business
to have a complaints handling procedure in place, the company must
investigate your PPI claim and respond to you in writing.
PPI companies will often make an offer of a partial refund or
token payment to try and persuade you to drop your claim. If you
decide to accept this offer you will not be able to take any
further action. If you reject the partial refund offer and repeat
your demand for a full refund on the grounds that the policy was
mis-sold to you, then you can continue with your full claim.
Taking further legal action
By law, the PPI company should respond to your complaint within
about 8 weeks, but they can request additional time to perform
their own investigation, if this is the case then they will write
to you to explaining this. You should allow them to complete their
enquiries just so long as they do so within a reasonable
timescale.
If the PPI company fails to respond after 8 weeks, or rejects
your complaint then you will need to consider taking further legal
action.
From here th3e first thing you should do is to refer the matter
to the Financial Ombudsman Service. This independent complaint
handler was set up by the government to deal with consumer's
complaints against authorised financial business. The Ombudsman
Service is entirely free to use and its decisions will be legally
binding on the PPI company.
Next you should make a claim against the PPI company through
your local county court. If your claim is worth less than £5000 it
will be dealt with under the court's small claims procedure; a
relatively quick and informal process. If the claim is worth more
than £5000 the normal rules of procedure will apply and you may end
up incurring court fees and solicitor's costs if you lose your
case.
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