How much compensation you will receive for a mis-sold PPI policy is dependent upon the sort of financial product to which it relates. Put simply, it may differ according to whether you have a loan, mortgage, credit card, car finance or other product.
Loan PPI
For loan PPI, the amount of your compensation is going to be determined by the amount of the monthly installments of the loan, exactly how many payments have already been made and the proportion of the loan repayments which relate to PPI. Would you have purchased PPI at all?
Where you would not have bought any loan PPI policy but for the mis-selling by the lender, you are entitled to be refunded the total amount you have paid for PPI, plus interest. For instance, imagine that you took a 5 year loan, on which the loan repayments were 200 per month. If the PPI premiums were 25% of the loan repayments, this would amount to 50 monthly in PPI premiums. If 20 months of the loan had elapsed, in other words, you would have made 20 payments, the amount of PPI that you would be entitled to have refunded is 1000 (50 x 20 months). Additionally, you will be entitled to claim interest on that sum. Interest is calculated at 8% annually on each PPI premium for the number of months it has been due.
Could you have bought a different type of PPI?
The situation differs where, but for the mis-selling by the lender, you would probably have bought a different PPI policy. In other words, you may have still purchased PPI, albeit a different sort of policy. In this scenario, you would probably only be eligible for a reimbursement of the PPI premiums paid (plus interest) less the amount you would have paid for the alternative PPI policy.
For example, imagine that, as in the example above, you had been mis-sold a PPI policy with regards to which the loan instalments were 200 per month, the PPI part of which was 50 and 20 months had elapsed. Had the PPI policy not been mis-sold, you might still have considered PPI a sensible option. However, you might have purchased a cheaper policy instead, for instance, one on which the PPI element of the monthly loan repayments was 25. In this instance, you would simply be eligible for the difference between the 1,070 and the amount that you would have spent on the alternative policy. With this example, you would have spent 500 on this alternative policy, so your refund would be halved. You will just be entitled to 500 (plus interest).
This situation applies equally to a scenario in which you were mis-sold a ‘front-loaded’ single premium PPI policy and, were it not for the mis-selling, you would most likely have purchased a typical payment PPI policy instead. Within this scenario, you’d be entitled simply to the difference between the amount you paid for the single premium PPI policy and the price of the standard payment PPI policy that you would otherwise have purchased.
Have you had a claim on a policy rejected?
Where you make a claim against the policy that has been rejected, though you could reasonably have expected it to have been paid, you are qualified to receive the higher of the full amount of the PPI premiums paid (1,070 in the example above) as well as the value of the claim. Put simply, when your claim on the policy will have given out more than the sum you have paid in PPI premiums, you will be entitled to this amount in the alternative, plus interest. This provides you two options. The lender should calculate which plan is more favourable to you and then pay you this sum.
Have you re-financed?
Where you were mis-sold just one premium PPI policy, which was subsequently cancelled to re-finance or consolidate a connected loan, your compensation should take account of the cumulative impact of the mis-selling. Many mis-sold PPI policies were effectively ‘rolled up’ into a subsequent loan, which also included PPI. Indeed, this policy could also have been mis-sold. Therefore, for those who have re-financed on a number of occasions, you’re likely to be eligible for substantial compensation.
Credit card PPI
The amount of compensation to which you will be entitled from your mis-sold PPI policy relates to a credit card can be difficult to calculate, because it is more likely to depend upon variations in the balance. Credit card PPI is often charged monthly as a proportion of the balance, for instance, 69p per 100. Therefore, when your credit card balance is prone to significant swings, you may well have paid more for PPI in certain months than others. Essentially, however, the principle remains the same as you are still entitled to be reimbursed whatever you have paid for PPI, plus interest. You may be also entitled to claim interest on the notional balance for the months in which, were it not for the mis-sold PPI, your balance could have been in credit.
For more guidance on mis-sold Bank of Scotland PPI claims or other bank or financial institutions visit PPI Claims Online
