It is now payback time for banks after running one of the largest financial rip-offs in the UK and millions of customers are busy making PPI claims with no paperwork or documents. Most claims are proving to be successful and that means consumers have pocketed billions of pounds in the last year but one question that many consumers are grappling with concerns the cost of filing a PPI claim.
This cost can vary from nothing to as much as 30% of your PPI refund depending on the route that you take to make your claim. When you file for PPI compensation on your own without incorporating any third party claims management companies, then you get to pocket all the refunds. You will however part with as much as 30% of your payout if you use third party PPI companies to make the claims on your behalf.
Making the PPI claims on your own-zero costs
If you feel that you might have been mis-sold PPI when you were taking your loan or mortgage, you can write to your lender to file for PPI compensation. There are lots of letter templates and questionnaires that you can download from the internet for use in the filing of the PPI claims.
In case you have not reached a proper resolution with your lender to reclaim bank charges you will need to write to the Financial Ombudsman office which arbitrates over disputes between lenders and their customers and is currently handling millions of PPI claims. This process may take a long time but when you are successful, you get to keep all of your money.
Costs associated with filing for PPI compensation claims via a claims management company
Many people who were victims of the PPI scandal are opting for this route and it is by far the most expensive. In this case, the PPI Claims management company will handle your claims every step of the way but they will charge you a hefty fee in case the claim is successful.
Most PPI companies charge 25% of the refund plus VAT. Assuming the average PPI compensation is £2500, you will end up paying up to 25% of this value which is £625 plus VAT of 20%. 20% of £625 roughly translates to £125. So from PPI refund of £2500, you will end up paying the PPI company £750 or 30% of the total compensation. PPI management companies are quite costly so it is advisable to manage the paperwork on your own so that you can keep all of your refund. Besides, some of them will charge you some upfront and consultation fees. There is also the question of how far back can you claim PPI, this is difficult to judge lots of companies say 6 years but it’s more likely to be 25 years.