According to recent figures published by the Financial Conduct Authority (FCA), lenders in the UK have paid out approximately £20 billion in compensation for mis-sold payment protection insurance (PPI).
This is definitely a staggering amount, especially considering that the average PPI payout is in the thousands of pounds (around £2,750). Although, how much does it cost for the average consumer to make a claim for compensation? Let’s take a deeper look…
You won’t be charged if you make a claim for compensation yourself, however, it will be expensive with regards to time. The average consumer doesn’t have much experience making claims, and so it will most likely be very time consuming to understand the claiming process.
So, if you have some time to spare then self-claiming might be the right approach for you. Here are the steps that you’ll need to take in order to file the claim:
First, you’ll need to go through your paperwork and look for the policy. This could be listed under several different names such as PLP, ASU, mortgage insurance, or payment protection plan.
Think about whether your policy was mis-sold or not. Was you told that the policy was mandatory? Were you self-employed or on a temporary contract? Were the exclusions not explained to you properly? There are many instances for the policy being mis-sold.
Next, you’ll need to write a letter to your lender. You can find many templates online, which are relatively easy to amend. It’s a good idea to also send along any documents that you think would help your case.
Your lender might take up to eight weeks to get back to you with a response. If you have been waiting longer than this then we recommend complaining to the Financial Ombudsman Service (FOS) and they will handle your claim.
Fees for Using a Claims Company
If you don’t want to go through the claiming process yourself then you can always ask for the help of a claims company. These companies will handle your claim from start to finish and ensure that you are paid the compensation that you deserve.
Claims companies won’t help you for free though, they do charge a fee for their services. This fee is generally in the region of 10% to 25%, if you are asked to pay more than 25% then simply walk away and find another company.
Their fees might seem expensive at first glance, but they’re actually very affordable. This is especially true if you have a busy schedule and simply don’t have the time to file the claim yourself.
The vast majority of claims companies operate on a no-win no-fee basis, meaning that you won’t have to pay anything if your claim isn’t successful.
So as you can see from the information provided above, there are two ways you can approach the situation: you can file the claim yourself or you can file the claim with the help of a claims company. Filing the claim yourself will save you from the management fees you’ll have to pay to the claims company, however, it will also cost you a lot more with regards to time.
Those people who don’t have busy schedules and don’t mind spending a few hours researching on how to make a claim would benefit most from filing the claim themselves. Those with a busy schedule who can’t afford to take the time to learn how to file a claim—or simply don’t want to deal with their lender directly—would benefit most from the help of a claims company.