What is a reasonable amount of compensation for mis-sold PPI insurance?
February 1, 2014 2:00 PM   Subscribe

I've been made on offer by my bank before my PPI claim has been fully processed by the FSO. Is £350 reasonable?

I've been led to believe by most of the PPI claim company adverts that it's possible to get £3000 in compensation for mis-sold PPI. I was missold PPI by HSBC in 2006. I made a claim to the bank who wrote back to advise that I was not eligible for compensation.

I then reported the matter to the Financial Services Ombudsman, who told me that I had indeed been mis-sold PPI and that I was eligible for compensation. A few weeks ago I got a letter from HSBC offering me approx. £350 which is apparently the amount of the premiums I paid plus interest.

I hope this doesn't seem greedy but as the loan eventually turned bad due to unforseeable circumstances, which didn't prevent the back claiming all of the money back from me, I would actually like the maximum amount of compensation. (I got slightly behind with payments; when the matter was turned over to a credit recovery company, I never missed a single repayment.) I've called the FSO to ask if the amount of compensation offered is reasonable, but they said it's not really in their remit to say.

Could someone with experience of PPI claims advise if I would be able to get more compensation (ideally, I'd like £3000 not £350) if I turned down the bank's offer?

Thanks for any advice.
posted by Musashi Daryl to Work & Money (5 answers total) 1 user marked this as a favorite
I think what you paid plus interest is a fair offer, and I would take it. The PPI claim companies advertise that you can get £3000 a) because they're trying to get customers by advertising a high amount, and b) because you can get that much... if that's what your premiums + interest add up to. You don't just get £3000 for being mis-sold PPI, you get it because you paid X amount for Y months and add Z interest and that equals £3000. In your case X times Y times Z equals £350.

One thing to check - you say £350 is "apparently" the amount of your premiums + interest (according to the HSBC letter). Have you done the sums yourself to double check that that's accurate?
posted by EndsOfInvention at 2:28 PM on February 1, 2014 [2 favorites]

Not legal advice, I'm a proofreader not a lawyer, etc. The amount you paid plus statutory interest would be a reasonable guess at what you would get if you took it to court and won. If it helps, when Mrs Peteyjlawson took Natwest to court over bank charges, she received an uncontested judgment for the amount she requested, which was the sum she'd been erroneously charged plus statutory interest (8% at the time, no idea what it is now), as well as reimbursement for fees to file the case at the small claims court. She had to provide paperwork to show that her sums added up in the form of highlighted itemised bank statements. You're unlikely to get a higher award or any punitive compensation for damages unless you could prove that being missold PPI caused you significant and tangible financial hardship or other damage. To me, it sounds like they're trying to save themselves the court fees and offering you the amount they'd be legally obliged to, so I'd take the offer and save myself the hassle.
posted by peteyjlawson at 2:58 PM on February 1, 2014

"Legally, if you have been mis-sold PPI you can claim the cost of the PPI policy plus all interest. In effect, this aims to put you back into the same financial position you would have been in if you had not taken out PPI with the loan." [Source]

So if that's what you're being offered, take it. If it isn't, calculate that value and tell the bank you'll take that. Simples.
posted by DarlingBri at 3:15 PM on February 1, 2014

Yes, the FOS's general position on upheld complaints is that you should be put back in the position you would have been if you had not been mis-sold the product. I have heard of cases where someone who successfully claims they were mis-sold PPI has ended up owing even more, because they had previously made a claim on the PPI, and the bank claims the payout back, and offsets it against the premiums.

If you are really £3K out of pocket due to having taken on the PPI policy you will have to show how, eg because you have paid £3K in premiums on a bad policy. See the case studies here and consider how your facts fit.
posted by wilko at 5:40 PM on February 1, 2014

I'd suggest posting this on the 'Reclaiming PPI' board on MoneySavingExpert. Many there have experience of this and what can be claimed.

I#m neither a lawyer nor an accountant, but based on what I know professionally regarding these claims and the advertising of them, I would agree with peteyjlawson. That is, if your claim is regarding PPI and not some other form of financial mis-selling.

It seems standard in my experience to offer premiums plus interest and any other incurred costs such as court fees. Those who received large sums did so because their premiums and term of loan was higher, and they are unusual cases, or involve larger loans such as mortgages or secured debt. You may get £3000 if your premiums paid plus the interest calculated comes to this sum. In your case, that sum appears to be £350 - it's calculated on what you paid plus the interest rate as you say. As I said, IANAL, IANAA, but they won't pay you more than they are obliged to in terms of the PPI costs.
posted by mippy at 8:10 AM on February 3, 2014

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