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ombudsman news

issue 142

October 2017

FAQs about PPI - PPI case studies

The deadline to complain about mis-sold PPI is 29 August 2019. Here are answers to some questions we’re often asked most about PPI and complaining about it.

Mr and Mrs K complain that PPI didn’t cover medical conditions

Mr and Mrs K came to us after their lender hadn’t upheld their complaint about PPI sold with their mortgage.

Mr K told us he’d had an ongoing medical condition at the time he and Mrs K were buying their house. He also told us they thought they’d had to take out the PPI to get their mortgage.

We looked at what information the lender had from the time of the sale. Their records showed that they’d advised Mr and Mrs K to take out the PPI – which meant they had to make sure it was suitable for the couple’s circumstances.

We looked at the forms that Mr and Mrs K had filled out, as well as the notes of the conversations they’d had with the lender’s mortgage adviser. We decided the forms made it clear they didn’t have to take out PPI as a condition of their mortgage.

When we looked at the notes of the conversation, we could see the mortgage adviser had discussed a number of things with Mr and Mrs K – such as their budget, any pay rise they might get in the future, and their need to keep repayments down. But we couldn’t see anything to show that their health, or the PPI’s exclusions, had been discussed.

Looking at the policy terms, we could see Mr K wouldn’t have been covered for his ongoing medical condition. In our view, the mortgage adviser should have taken this into account and explained to Mr and Mrs K that the PPI might not have been right for them because it didn’t meet all of their needs. And we thought this would have made a difference to Mr and Mrs K’s decision to take out the policy.

For these reasons, we told the lender to pay back what the policy had cost Mr and Mrs K, plus interest.

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Miss L complains her PPI was useless because she was self-employed

Miss L got in touch with us after her bank didn’t uphold her PPI complaint. She believed the PPI had been useless to her, as she’d started working for herself soon after taking it out.

When we asked the bank for more information, they sent us call recordings from the time. We heard Miss L clearly explain that she was working in a supermarket – but had firm plans to leave in a month to start a cleaning business.

Miss L’s PPI didn’t cover people who were self-employed. She’d made it clear to the bank she was soon going to work for herself – but they’d gone ahead and sold her the PPI anyway. We didn’t think Miss L would have taken out the policy if she’d known it didn’t cover her new working arrangement. So we told the bank to refund the premiums she’d paid, adding interest.

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Mr and Mrs N complain they were told they had to have PPI to get a mortgage

Mr and Mrs N complained to their lender, saying they’d been told their mortgage wouldn’t be approved unless they took out PPI. When their lender didn’t uphold their complaint, they got in touch with us.

We asked Mr and Mrs N what they remembered about taking out their mortgage and PPI. They explained they’d had a meeting in person with a mortgage adviser. Although they couldn’t remember much about what happened, they felt that, as they’d been first time buyers, the adviser had taken advantage of their inexperience and misled them.

Although the lender confirmed the meeting took place, they didn’t have records of what exactly had happened during it. But we asked the lender for all the information that would have been available to Mr and Mrs N in the meeting.

We found there had been separate application forms for the mortgage and for the PPI. Both forms clearly set out that PPI was not a condition of the mortgage. This wording was next to where Mr and Mrs N had to sign if they wanted the cover – which they’d done.

Although we couldn’t say for sure what conversations took place, we were satisfied the forms set out clearly and prominently that the PPI was optional. And based on what they’d told us, it was unlikely that they’d been misled. So we didn’t uphold their complaint.

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Mr R complains he didn’t get any compensation even though his PPI complaint was upheld

Mr R got in touch with us as he was unhappy with his credit card provider’s answer to his PPI complaint. They’d said in their final response letter that they agreed that they’d mis-sold him PPI – but they wouldn’t be paying him any compensation because he’d made a successful claim on the policy.

When we looked at Mr R’s circumstances, we decided the credit card provider had acted fairly. The whole cost of Mr R’s PPI was less than the amount the policy had paid out during his successful claim.

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Ms T complains about PPI after being declared bankrupt

Ms T complained to her bank in 2015 that it had mis-sold her PPI on a personal loan, which she’d taken out in 2009. The bank offered to refund the full cost of the PPI, adding interest. But months later, Ms T still hadn’t got the payment – so she got in touch with us.

When we looked into things, we found that Ms T had been declared bankrupt in 2011. Her bank told us that when they’d realised this, they’d got in touch with her bankruptcy trustee, who’d said that legally the money had to be paid to them. The bank had paid the settlement directly to the trustee, and Ms T hadn’t got anything.

We told Ms T that we thought this was fair. The loan had become part of the bankruptcy estate along with her other debts. And although she’d been discharged from her bankruptcy in 2012, it didn’t mean that the debt was wiped out or paid off – and the bankruptcy trustee had a right to the compensation money.

We explained that if Ms T hadn’t been sold PPI, she would have had the money it cost her instead. That money would have ended up being part of the assets in her bankruptcy. And the trustee would have used it to reduce her debts. So we thought it was fair that Ms T’s bank had paid the money directly to her bankruptcy trustee.

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Image: Charlie Sweeney
lead ombudsman and director of casework
Charlie Sweeney
lead ombudsman and director of casework

ombudsman news gives general information on the position at the date of publication. It is not a definitive statement of the law, our approach or our procedure.

The illustrative case studies are based broadly on real-life cases, but are not precedents. Individual cases are decided on their own facts.