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PPI – When you work it out – The banks actually got off lightly!

It estimated up to 6.4million consumers have been mis-sold Payment Protection Insurance since 2005. It is expected these victims, collectively, will pay some £350million to the Treasury in tax!. With the average individual tax bill likely to be around £50 per person, it’s a much needed windfall for the Chancellor. And there will be a lot of people paying far more than that.

If you have a valid claim, then you might expect six years’ worth of payments, paid as a refund – which is exempt from tax – plus an additional eight per cent interest, for the time the bank hung onto your money – but this is taxed.

Average PPI refunds are expected to be around £1,000, which will include about, £240 in accumulated interest. If, as is assumed, this interest is taxed at the basic rate of twenty per cent, the Government will receive £48. Higher rate taxpayers can expect to pay more. One refund of £16,000: left the victim with a £1,536 tax bill.

Marc Gander, of the Consumer Action Group, summed it up when he said: ‘The banks must be saying, “This is fantastic”. For years they took people’s money under this scam and lent it back out through overdrafts, personal loans and credit card loans charging interest rates of between 15 and 29 per cent.

‘When they are finally rumbled and ordered to pay it back they are charged just 8 per cent in interest, a fraction of what they have made from their customers in the meantime.

Payment Protection Insurance was grossly mis-sold in the past and was also massively overpriced. But that doesn’t mean it is a bad product or that it is worthless.  It simply means that anyone taking out a mortgage or a personal loan should shop around for a good protection policy, at a competitive rate. Oh yes, and do check the small print very carefully. Experience has shown that you cannot trust or believe all that banks say or advise.

Borrowers, in the past, were actively encouraged to take out PPI even though there was no way they could have ever benefited from it. Many unsuspecting borrowers were blatantly lied to and told that they needed PPI in order to be accepted for the loan or mortgage, or that it would greatly improve their chances of being approved for one. Some even had it added to the cost of their loan without even being told that they would be paying for it.

Now that compensation is finally being paid to customers who have been poorly advised or mis sold PPI you should perhaps check whether you have a valid claim for consideration. It is thought that around 13 million PPI products were sold in the UK, and in 2006, it is estimated some £4.4 billion was paid in premium.  Experts within the industry believe between 50% and 70% of all policies were mis sold. If you were sold PPI after January of 2005, then you may be eligible for compensation, purchases before that time are not.

Payment protection insurance and any new insurance products which may come onto the market will in future be closely monitored for compliance with new regulations, and to ensure they are fairly priced. Bankers and lenders will also have to ensure advisors involved in selling of insurance type products are adequately trained: in other words – they understand the product they are selling, how it works – recognise who is eligible, and who may not benefit from it.

If you think you may have a valid case for a claim, you don’t necessarily have to go through a long and stressful procedure in order to get back what’s legally yours. As you might imagine, banks and other lenders don’t make it easy to claim back PPI:  at Consumer Finance Claims we look to recover the full cost of your policy plus interest, if we believe that you have been mis-sold PPI. Even if the loan is still running we can look to reduce your ongoing payments as part of our negotiations






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BulletpointsAverage claim value £2500

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BulletpointsOn average our PPI claims take 12 weeks

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Congratulations! You're one step closer to receiving your compensation for mis–sold Payment Protection Insurance.


If all details look OK you will receive a Claim Pack through the post, usually within 48 hours. If there are any issues we need to discuss one of our advisors will call you.


Either way you need to return your Pack as quickly as possible to prevent any delays with your claim!