How much will I get if I reclaim mis-sold PPI?

Summary: This article explains about payment protection insurance (PPI) redress and how it is calculated.

PPI complaints have soared in recent years due to the publicity surrounding the mis-sale of many of the insurance products. But how much can actually be reclaimed if a policy was mis-sold? Can interest also be added to the amount?


Redress means to set right or repair a situation, and in the case of PPI compensation, the Financial Ombudsman states that when a consumer’s complaint is upheld, the business should “put the consumer in the position they would now be in if the original problem that led to the complaint hadn’t happened” (see Financial Ombudsman website ). What this ultimately means is that the PPI should be compensated in full.

How will PPI compensation affect my loan which I am currently repaying?

The Financial Ombudsman advises that in the case of a PPI complaint on an existing loan, the policy should be cancelled and the consumer fairly compensated. Initially, this would involve a restructuring of the loan, so the monthly repayments and the amount remaining are what they would have been had the PPI not been taken out. The amount then overpaid on the previous payments would be refunded.

Can I also get compensation for the interest?

When a complaint about PPI is upheld, and compensation is awarded, interest is also added to the total amount of compensation. The Financial Ombudsman recommends that 8% per year should be added to each over-payment paid on the loan (not 8% per year on the total amount of compensation).

Is PPI redress the same for PPI on a credit card as it is on a loan?

There are some differences to the way any compensation is calculated with a credit card, but the fundamental rule of putting the consumer in the position they would now be in if the original problem that led to the complaint hadn’t happened, still applies. With credit cards, the PPI premium is added to the credit card balance each month and interest is added to it, there for the calculations for redress can be quite complex. Interest can also be compensated for at 8% per year as with a regular loan.

For anyone considering making a complaint about PPI, or any other financial decision, such as entering an Individual Voluntary Arrangement (IVA) or Debt Management Plan (DMP) there are many organisations available to provide independent advice, such as a reputable licensed money advisor, or from one of the free companies such as the Citizens Advice Bureau (CAB).