Anyone who's had a loan or credit card over the past few years may be able to reclaim £1,000s.

That's because the Payment Protection Insurance (PPI) that's flogged alongside loans – to protect your payments if you can't work – has been systematically mis-sold by many companies. So it's vital you check NOW in case you're one of the victims.

Why is misselling so common?

PPI is HUGELY profitable. On a £5,000 loan, while the interest may be £1,000, the insurance could be £1,500. In addition, only one in ten policies ever pay out. It's no surprise a chunk of some bank staff's salaries can depend on how many policies they sell.

Is PPI bad?

Not for those who need it. Yet there are two problems. First, when insurance is sold with a loan or credit card, it can cost up to five times as much as similar cover from an independent provider. So if you already have PPI on a loan you may be able to cancel, switch and save a bomb.

Plus, there's the fact many people have been sold policies that aren't suitable for them; and that's the reason you can reclaim. What counts is what you were told when you were sold the insurance. You may have a reclaim if...

• The insurance salesman said it was compulsory. If he or she said you could only get the loan with insurance.
  
  
• You weren't given full details of the cover. Salesmen often say: "Here's a 'fully protected' loan", without telling you what the insurance was or checking whether it's appropriate. 'Fully protected' is codename for PPI.
  
  
• You were not permanently employed. If you were you self-employed, on a short-term contract, unemployed or retired when you took the loan and the policy included unemployment cover, then it may be worthless.
  
  
• You had a pre-existing medical condition. These are usually excluded, and if you weren't told that, you were probably mis-sold.
  
  
• You were already covered. If you were already similarly covered, perhaps through work or your partner's policy and it wasn't checked, you may have a claim.
  
  
• In addition, if your loan/card provider's already been fined. 17 providers, including Alliance & Leicester, Capital One and Liverpool Victoria, have been fined for procedural failings. If yours is one, it tends to make mis-selling claims easier.
  
  

External Link: To check if any of these reasons apply to you, read further details in Martin's full Loan Insurance Reclaiming guide.

How to reclaim

Write to the company that sold you the policy (not the insurer), explaining why you think you were mis-sold and ask for a refund of everything you've paid PLUS interest. Almost certainly, it'll write back saying "no".

Don't worry about this, it's just seeing if you're serious. Simply write back again, this time saying you'll take the matter to the Financial Ombudsman if it doesn't pay up. If you get another "no", write to the Ombudsman – it's totally free and can all be done on paper.

Use free template letters

External Link: Free reclaiming template letters to get your cash back are available in Martin’s full PPI Reclaiming guide.