PPI refunds made by high street banks may have been inadequate, due to bad calculations made by the institutions themselves. An expert commissioned by the BBC believes the total amount of compensation that has been withheld could amount to £1 billion.
PPI refunds can be recovered by either approaching the bank directly, or through a complaint made to the Financial Ombudsman Service. Approaching the bank first is often simpler and quicker, and they should give you your money back if they believe the product was mis-sold.
The problem is that many of these refunds did not include any penalty charges the customer had been charged as a result of the mis-sale. For example, if the PPI premiums caused someone to fall into their overdraft, the banks should refund the charges. This is because if the PPI had never been added to the loan, mortgage or credit card the customer wouldn’t have gone into their overdraft and subsequently incurred the penalty charges
The financial regulator, the Financial Conduct Authority (FCA), has stated, “If there are penalty fees or charges that arise from the mis-sale of the original PPI, then they should be refundable.”
Caroline Wayman, Principal Ombudsman and Legal Director at the Financial Ombudsman Service has also added that under the rules, fees and charges triggered by mis-sold PPI premiums have to be refunded to customers.
What Does This Mean?
Those who have been issued refunds by banks directly, without having to go to the Financial Ombudsman Service, may not have received the full amount of compensation they’re entitled to. This may have happened where the PPI premiums caused you to rack up debt, bank charges, and high interest payments.
This point is also relevant to any mis-sold financial product. For example, you may have taken out an investment as a repayment vehicle to your mortgage and were told by the adviser that the investment was deemed low risk when actually it involved a high degree of risk and volatility.. The investment then declines in value and you suffer a financial loss, meaning you can no longer repay the mortgage amount.
If financial mis-selling has caused you extra difficulties, such as getting into debt or incurring bank charges, you’re entitled to be put in the position you would be in if the mis-selling had never occured. This includes refunding your premiums/original investment amount, and recompensing you for any debt and charges plus added compulsory interest.