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How does the ombudsman assess disputes about whether or not PPI was sold?

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In a significant number of the PPI complaints referred to us there is a dispute about whether or not a PPI policy was actually sold to the consumer.

These disputes over "was a policy sold?" tend to arise when the consumer says they are concerned they may have been mis-sold a PPI policy in connection with a credit agreement - but they can't recall the precise details of the transaction.

This might happen for a number of reasons - including cases where:

  • the financial business didn't tell the consumer that it was selling them a PPI policy;
  • or a claims-management company has encouraged a consumer to raise concerns without due cause.

In light of this - and given the number of PPI cases now being referred to the ombudsman service about this issue - we recently hosted an event for representatives from financial businesses and claims-management companies. At the event, we jointly identified the practical steps that everyone involved could take - to improve the position for consumers and to avoid unnecessary complaints and delays.

The event we held with these stakeholders showed that there was a shared will to improve the position for consumers - and a recognition that the current position was unsatisfactory for everyone concerned. Building on the outcome of the discussions at that event, we have identified a number of simple procedural steps that will help both sides to eliminate needless referrals of complaints.

At the stage that complaints are referred to the ombudsman service, we would typically expect to see evidence that claims-management companies (or third party representatives) have already:

  • Obtained relevant paperwork from the consumer where this is available - and carried out a preliminary check of the credit card statements or loan documentation, to attempt to establish whether a PPI policy exists.
  • Provided enough information to enable the financial business to carry out a search of its systems - including the full name, full address and date of birth of the consumer (including any previous names and addresses), as well as account/policy details, if available, and any other relevant information from the point-of-sale.
  • Completed the payment protection insurance consumer questionnaire (DOC 219KB) as fully as possible - and sent it to the financial business to help it assess the complaint. There is a practical guide on our website to help with completing this form.
  • Provided any additional information reasonably requested by the financial business, to help it trace the account or PPI policy.
  • Considered carefully the explanation and evidence given by the financial business - where it has explained that it can't find the PPI policy in question - in deciding whether or not a PPI policy actually existed.

Similarly, at the stage that complaints are referred to the ombudsman service, we would typically expect to see evidence that financial businesses have already:

  • Carried out a reasonable search of their systems (including archive systems), to trace the consumer and to identify whether there is (or was) a PPI policy.
  • Reviewed all the available information about the consumer - including any details that may have changed since the time of sale (for example - names and addresses). This information may have been available from its own records - or it may have been provided by the consumer.
  • Taken account of the fact that consumers may not know the exact date that policies were taken out. Businesses should avoid taking too narrow an approach in their searches. For example, where the consumer thinks a policy was taken out in June 2007, a search might reasonably cover several months either side of that date.
  • Asked for further information, if needed, to help trace the consumer.
  • Clearly set out in their final response the level of investigation they have carried out - enclosing relevant supporting documentation (for example, screen-shots, credit agreements etc).

The following case studies cover a range of situations where the parties have been in dispute about whether or not the consumer had a PPI policy. They include examples of how the actions of claims-management companies and financial businesses alike can affect the efficient handling of a complaint.

  • Using a claims-management company, Mr F contacted his credit card provider to complain that he had been mis-sold a PPI policy. The complaint was referred to us when it remained unresolved after eight weeks.

    The business provided us with evidence including copies of the credit card application form, credit card statements and information from its internal systems. All these documents showed that no PPI policy had been present on Mr F's account.

    We contacted the claims-management company and explained that no PPI policy appeared to have been sold to Mr F. We asked it if it could provide any information that might show Mr F had held the PPI policy he was complaining about.

    The claims-management company subsequently sent us a selection of credit card statements, together with documents from the time Mr F took out his credit card. It said it believed these would provide evidence of Mr F's PPI policy. However, it was apparent from these documents that PPI had not been present on Mr F's credit card account.

    We told the claims-management company that without the evidence of a PPI policy on the documents they had provided, this supported the business's case that no policy existed. The claims-management company accepted this and did not pursue the complaint further.

  • Mr N complained to the financial business that he had been mis-sold a PPI policy in connection with his credit card account. He referred the complaint to us after eight weeks. It was not clear at this point whether the business had responded to his complaint.

    The business told us that it had carried out a detailed search for a PPI policy under the consumer's name - but had been unable to trace a policy.

    However, the consumer gave us credit card statements that showed the PPI policy on his account. When we asked the business to consider this evidence, it conceded that Mr N had held PPI on his account. It later said it would uphold Mr N's complaint that the policy had been mis-sold to him.

  • Mr M complained using a claims-management company that he had been mis-sold a PPI policy when he took out a loan. The business replied that there was no PPI policy on Mr M's loan account. However, it did not provide any evidence to support this.

    Mr M and his claims manager were not satisfied with this response and referred the complaint to us. The business said again that there was no PPI policy on Mr M's loan account - and it gave us evidence showing this.

    We asked the business to confirm some details about the account that did not match what Mr M had said. Having received clarification of these points, we agreed that Mr M's account had not been covered by a PPI policy. We wrote to Mr M's claims-management company to explain this - and we provided them with the relevant documentary evidence.

    On the basis of this evidence, Mr M accepted our opinion on the complaint and decided not to pursue the matter further.

  • Mrs L complained using a claims-management company that she had been mis-sold PPI in connection with her personal loan. The business did not respond to Mrs L's complaint. Mrs L's claims-management company subsequently referred the complaint to us.

    The business told us that it had no record of PPI being sold to Mrs L - but it did not provide any evidence to back this up. Our adjudicator requested a copy of the consumer credit agreement and print-outs of the account history, to show there was no PPI policy on Mrs L's account.

    The business sent us screen-shots from its computer records - but explained it did not believe it needed to provide a copy of the consumer credit agreement. We told the business that to show there was no PPI on the account from the outset, we typically needed to see the consumer credit agreement in addition to the account records.

    The business then gave us a copy of the consumer credit agreement. This confirmed that there was no PPI taken out at the start of Mrs L's loan. We explained this to the consumer's claims-management company and provided it with a copy of the evidence. Mrs L decided not to pursue her complaint.

  • Mrs S complained using a claims-management company that she had been mis-sold a PPI policy. The complaint was referred to us when it remained unresolved after eight weeks.

    We could not tell whether the business had responded to the complaint, as the claims-management company did not send us a copy of the business's final response. When we checked with the business, it told us that it had been unable to uphold Mrs S's complaint, as there was no PPI on her loan account.

    Meanwhile, the claims-management company had carried out its own review of a number of PPI complaints it had previously referred to us. Noting that the business had said it was unable to trace the account or PPI policy for this case - and recognising that the consumer had no evidence to show the existence of a policy - it asked us to withdraw the complaint on the consumer's behalf.

  • Mr E complained using a claims-management company that he had been mis-sold PPI in connection with his credit card. The business told him that it was unable to trace any record of the credit card account he was complaining about. Mr E then referred his complaint to us.

    When we checked the details of the complaint with the business, it confirmed it could not locate the account number. It also said it could not trace any credit agreements held by Mr E that had started around the time he believed he had taken out the card.

    However, the business was able to locate two other loans and PPI policies for Mr E. One of these was the subject of a complaint that had been referred to us separately. The other was the subject of a complaint that was still being investigated by the business.

    We asked Mr E if he had any additional information or evidence that might help the business trace the account and policy that related to this specific complaint. Mr E said he had checked his records and could find no other documents for this particular account.

    We explained that as we were unable to establish the existence of a PPI policy on his credit card account, this complaint from Mr E was not one we could consider. Mr E decided not to pursue this complaint further.