Understanding PPI Commission Charges
Understanding PPI Commission Charges
When you took out a Payment Protection Insurance (PPI) policy, you may not have realised that part of what you paid went towards commission for the provider or broker. PPI commission is a fee that lenders or insurers charge for arranging the policy, and it is often added to your monthly payments or included in the overall cost of your loan or credit agreement.
What Is PPI Commission and How Is It Charged?
PPI commission is typically a percentage of the premium you pay for your insurance. In many cases, lenders received a significant portion of your PPI payment as commission, sometimes as much as 67% or more of the total cost. This commission is often hidden in the policy cost, so you might not have been told exactly how much you were paying for the insurance itself versus the commission.
The rules around disclosure of commission have changed over time. Following the Supreme Court’s decision in Plevin v Paragon Personal Finance Ltd [2014] UKSC 61, it was established that failing to disclose high levels of commission could make a PPI sale unfair under the Consumer Credit Act 1974. If the commission was excessive and you were not told about it, you may have grounds to complain.
Why Some Commission Charges May Be Unfair or Incorrect
Not all commission charges are unlawful, but they can be unfair if:
The commission made up a very large part of your PPI premium (often over 50%).
You were not told about the commission at the time you bought the policy.
The cost of the commission was not made clear in your policy documents.
If you believe that you were charged a high commission without your knowledge, you could have been treated unfairly. The Financial Conduct Authority (FCA) has provided guidance that customers should be informed about large commission payments, and failing to do so can give you the right to make a complaint.
How Commission Fees Affect the Total Cost of Your PPI Policy
Commission fees can significantly increase the overall cost of your PPI policy. For example, if you paid £1,000 for PPI and the commission was 67%, £670 of your payment went to the lender as commission, not towards your insurance cover. This means you may have paid far more than you needed to for the protection you received, reducing the value of your policy.
High commission charges can also contribute to other issues with PPI, such as policies being mis-sold or not providing the cover you expected. For a broader look at these issues, see Problems with Payment Protection Insurance (PPI).
How to Identify If You May Have Been Wrongly Charged Commission
You may have been wrongly charged commission if:
You were not told about any commission or how much it was when you bought your PPI.
The commission made up more than half of the total PPI premium.
You feel the cost of your PPI policy was much higher than expected, or you did not understand what you were paying for.
To check, review your original policy documents and any correspondence from your lender or insurer. If the commission is not clearly stated, or if you have concerns about how the policy was sold to you, you may have grounds to complain.
If your complaint relates to broader mis-selling issues, such as being told you had to take out PPI or not being eligible for cover, you may also want to read about how to Complain About Mis-Sold PPI.
Understanding how commission works is the first step in recognising if you have been unfairly charged. If you suspect you have been affected, you have the right to raise a complaint and seek redress.
Your Rights as a Consumer Regarding PPI Commission
When it comes to Payment Protection Insurance (PPI), you have clear rights as a consumer regarding how commission is charged and disclosed. If you were sold a PPI policy, the law requires insurance providers and brokers to treat you fairly and be transparent about any commissions they receive.
The Financial Conduct Authority (FCA), which regulates financial services in the UK, has set strict rules to ensure customers are not misled or charged unfairly. According to the FCA’s guidelines, if a significant portion of your PPI premium was taken as commission – especially if this was not made clear to you at the time of sale – you may have been treated unfairly. This was highlighted in the landmark ‘Plevin’ case, where the Supreme Court ruled that undisclosed high commissions could be considered unfair under the Consumer Credit Act 1974.
Your rights mean that if you suspect you were charged excessive or hidden commission on your PPI policy, you can make a complaint and potentially claim back some of the money. These protections are designed to prevent insurers and brokers from taking advantage of customers by adding unfair fees or failing to explain how much of your payment goes towards commission.
To support your complaint, it’s important to keep any documents related to your PPI policy, such as policy documents, statements, letters, and any evidence of what you were told at the time of sale. These records can help show whether the commission was properly disclosed and if the charges were fair.
If you want to learn more about your rights and how to handle broader issues with insurance, our guide on Problems with Insurance Policies offers further information and practical steps you can take. Understanding your rights is the first step towards challenging unfair PPI commission and ensuring you are treated fairly by your insurer.
How to Make a Complaint About PPI Commission
How to Make a Complaint About PPI Commission
If you believe you were unfairly charged commission on a Payment Protection Insurance (PPI) policy, you have the right to complain and potentially claim back some of the money. Here’s a step-by-step guide to help you raise your complaint effectively.
1. Contact Your Insurer or Provider
Start by contacting the company that sold you the PPI policy – this could be your bank, lender, or insurer. Most providers have dedicated complaints procedures, which you can usually find on their website or by calling their customer service.
2. Gather Essential Information and Evidence
To strengthen your complaint, collect as much relevant information as possible, such as:
The PPI policy number and account details
Copies of any policy documents, statements, or letters
Details of when you purchased the policy and through which provider
Any evidence showing how much commission was charged (this may be detailed in policy paperwork or statements)
Notes of any conversations or correspondence about PPI with your provider
If you don’t have all the documents, you can still complain – just provide as much detail as you can.
3. Explain Why the Commission Was Unfair
Clearly outline why you believe the commission charge on your PPI was unfair. For example, you may have discovered that a significant portion of your PPI premium was taken as commission by the provider, and you were not told about this at the time of sale. This issue was highlighted in the landmark Plevin v Paragon Personal Finance Ltd case, which led the Financial Conduct Authority (FCA) to set rules for redress where commission was not disclosed and was deemed excessive (over 50% of the PPI premium).
In your complaint, mention:
That you were not informed about the amount of commission taken
The percentage of commission (if known), and why you feel this was excessive
How this lack of transparency impacted your decision to take out the policy
If your complaint also involves concerns about how the PPI was sold to you (for example, if you feel it was mis-sold), you may find our Complain About Mis-Sold PPI guide helpful.
4. Submit Your Complaint
You can usually submit your complaint in writing, by email, or over the phone. It’s best to keep a written record for your own reference. Clearly state:
That your complaint relates to undisclosed or unfair PPI commission
The details and evidence you have collected
The outcome you are seeking (such as a refund of the commission above the 50% threshold)
Providers are required to acknowledge your complaint and respond within eight weeks.
5. Keep Track of Your Complaint
Stay organised by:
Keeping copies of all correspondence and notes of phone conversations
Recording dates of when you sent and received information
Setting reminders to follow up if you don’t receive a timely response
If you’re not satisfied with the response, or if you don’t hear back within eight weeks, you may be able to escalate your complaint to the Financial Ombudsman Service.
Taking these steps can help ensure your complaint is clear, thorough, and more likely to be resolved in your favour. For more information on related issues, including mis-selling, see our Complain About Mis-Sold PPI page.
What to Do If Your Complaint Is Not Resolved
If your insurer rejects your PPI commission complaint or fails to respond within eight weeks, you still have options to pursue your case. It’s important not to give up, as many people have successfully challenged unfair commission charges by following the right steps.
Escalate Your Complaint
If you’re unhappy with your insurer’s final decision, or if they haven’t replied after eight weeks, you can take your complaint further. The next step is usually to refer your case to an independent body for review. For detailed guidance on what to do next, see Taking Your PPI Complaint Further.
The Financial Ombudsman Service
You have the right to ask the Financial Ombudsman Service to look into your complaint. This is a free and impartial service that helps settle disputes between consumers and financial businesses. The Ombudsman will review your case, including all correspondence and evidence, and make a decision based on what’s fair and reasonable.
You can find out more about how the process works and how to submit your complaint on the Financial Ombudsman Service website. There, you’ll find clear instructions on what information you’ll need to provide, as well as answers to common questions about the process.
If you’re in England and need specific guidance on contacting the ombudsman, see Contact an Ombudsman in England.
Follow the Correct Procedures
To give your complaint the best chance of success, make sure you follow the official complaints procedure. This usually means:
Raising your concerns directly with your insurer first, in writing if possible.
Keeping copies of all correspondence and evidence, such as policy documents and letters.
Waiting for the insurer’s final response (or eight weeks, whichever comes first) before contacting the Ombudsman.
Following these steps not only shows you’ve acted reasonably but also ensures the Ombudsman can take up your case without delay.
When to Seek Legal Advice
Most PPI commission complaints can be resolved through the Ombudsman, but there may be situations where you want extra support. If your case is particularly complex, involves large sums of money, or you’re unsure about your rights, you may wish to seek independent legal advice. Legal professionals can help you understand the relevant rules – such as the Financial Conduct Authority’s guidance on unfair commission – and advise you on the best course of action.
Next Steps
If your complaint isn’t resolved to your satisfaction, don’t hesitate to escalate it. The process is designed to be accessible and fair, and many people have received compensation for unfair PPI commission charges by following these steps. For more information on what to do next, visit Taking Your PPI Complaint Further or explore the Financial Ombudsman Service for additional support.
Additional Support and Related Issues
Additional Support and Related Issues
Raising a complaint about PPI commission can sometimes reveal wider issues with your insurance or finances. Many people discover that problems with PPI are linked to other difficulties, such as being unfairly charged on other financial products or facing obstacles when trying to get new insurance. Understanding these connections can help you address the root causes and find the right support.
How PPI Commission Complaints Connect to Other Insurance Problems
If you’ve found unfair commission charges on your PPI policy, you may also have experienced similar issues with other financial agreements, such as car finance or personal loans. Unfair or hidden charges are unfortunately not uncommon in various financial products. If you suspect you’ve been affected elsewhere, it’s worth learning more about your rights regarding Car Finance Compensation and other consumer finance complaints.
Additionally, making a complaint about PPI could sometimes affect your relationship with insurers, especially if you have ongoing policies or wish to take out new cover. If you’re having trouble getting insurance as a result of your complaint or for any other reason, you might find helpful advice in our guide to Problems Getting Insurance.
The Impact of PPI Issues on Your Finances
Disputes over PPI commission can put a strain on your finances, especially if you are waiting for a refund or compensation. In some cases, unresolved PPI issues may even affect your credit rating or make it harder to access other financial products. It’s important to keep track of how these disputes are affecting your overall financial situation and to seek advice if you’re struggling to manage repayments or other commitments.
Getting Help with Financial Products and Support
If you’re finding it difficult to access insurance or other financial services, you are not alone. There are steps you can take to improve your situation, such as checking your credit report, seeking free debt advice, or exploring alternative insurance providers. If your financial difficulties are linked to wider issues – like job loss, illness, or a sudden drop in income – government benefits may be available to help you while you resolve your complaint.
To find out what support you could be eligible for, use our tool to Check What Benefits You Can Get. This resource can help you understand which benefits might be available based on your circumstances.
Understanding How Benefits and Complaints Interact
If you’re already claiming benefits, it’s important to know how a successful PPI commission complaint (and any compensation you receive) could affect your entitlement. Some types of compensation may count as income or savings, which could have an impact on means-tested benefits. For a detailed explanation of how different benefits interact and what you should be aware of during financial disputes, see our guide on the Interplay with Other Benefits.
If you need further guidance, consider speaking to a financial adviser or a free advice service. Exploring related topics can also help you better understand your rights and options when dealing with PPI commission and other financial issues.
