If you have received a PPI pay-out from the Lloyds Banking Group (which includes Halifax and Black Horse), Barclays or RBS/Natwest you may have been short-changed and therefore may be in line for a further pay-out. Here’s what you need to know:
Why is there a further claim?
These banks have taken advantage of a loophole that allows for something called “alternative redress”, the result obviously being that the bank pays out less and as a consequence your pay-out is reduced. The loophole has to do with those customers who had purchased single-premium PPI policies, where the entire cost of the insurance was paid upfront and added to the loan. Instead of returning all of the customers’ money, the bank was deducting the cost of a cheaper, regular premium policy from the pay-out, citing the "alternative redress" rules outlined by the UK financial regulator.
This means that they were treating these claims as if they'd just been sold the wrong type of PPI rather than completely mis-sold PPI.
If it’s a loophole how can I claim?
Whilst providers are within their rights to offer comparative redress under the Financial Conduct Authority's (FCA) rules, they must only do so "fairly" and consistently.
In these cases where the banks have made an assumption about whether the customer would have purchased the cheaper option it is likely that they fall outside of being "fair". How can the bank therefore make such an assumption without having either a crystal ball or absolute confirmation from the customer?
Further, many people argue that they may not have gone with any kind of PPI or would have gone with another company and therefore it would be impossible for the banks to assume that they would choose that particular product.
How do I know if have a claim?
Barclays, Lloyds Banking Group and RBS/Natwest have all confirmed that they took advantage of the "comparative redress" loophole during the following periods:
So if you received a pay-out from one of the above banks during the applicable period and your offer letter contained the words “alternative redress” or “comparative redress”you may have a claim. If in addition to this you can categorically state that you would not have purchased a cheaper policy (if given the option at the time that you purchased the original PPI) your chances of having a claim dramatically increase.
I think I have a claim, what next?
Dig out the letter that you received from the bank when they confirmed that they were going to compensate you for the PPI being mis-sold and see what it says, as described above. If you cannot find it contact your bank and ask them if you were given alternative redress when they paid out your PPI compensation. If they confirm that this was the case say that you wanted a full refund and demand that they deal with this. Alternatively, if they say that they did not give you alternative redress write to them and ask the question and say that you want the answer in writing.
If they refuse or fail to confirm if you were given alternative redress or if they confirm that they did but refuse to compensate you the next step is to make a complaint to the Financial Ombudsman Service (which is free and easy to do). Before making a complaint to the Financial Ombudsman it is important that you firstly give the bank at least eight weeks to respond and deal with your complaint.
The financial ombumdsman service will then send you a claim form to fill out where you will provide the details of the PPI claim that you made and the award that you were given. In this respect it will be better if you are able to provide a copy of all letters and communications that you have received from the bank in relation to your PPI payout.
If you have any questions about this, PPI generally or indeed any other legal or consumer matter visit Dean’s FREE legal and consumer website.