Remember: PPI refunds were for mis-sold policies

S.F. writes: About two years ago I contacted a claims company to look into any payment protection insurance (PPI) I may have had. At the time, Lloyds Bank advised that no PPI was attached to my old mortgage. However, Lloyds contacted me again recently to say there had been an error and I did in fact have PPI. I queried this, as it suggested the error went back to 1995 and had not been spotted in almost 25 years. YOU have told me that at first, the bank said it would treat this as a PPI complaint, but later said that it would not pay out, as there was no intention to create a contract between you and Lloyds. That did not make much sense, since if there was no contract, then there was no PPI cover, which would surely mean that Lloyds should refund all the premiums you paid.

The bank then changed tack and said there was a policy, and it had been sold correctly. This is the crucial point. Publicity surrounding PPI refunds has led lots of people to think all policies were useless, and refunds were being dished out automatically. Wrong. Refunds have only been due if the policy was mis-sold.

Staff at Lloyds have looked back at their records and found you applied for PPI to protect your mortgage payments if, say, you were unable to work through illness or job loss. So no refund is due. But because it mishandled your claim, Lloyds has credited you with £200 to say sorry.