The PPI scandal refuses to go away, but that is simply because it is far from over. There are still thousands of claims being made and the scandal regularly finds fresh steam amidst discoveries such as this month’s revelation that some banks and credit providers were short-changing claimants.
If you are an investor in property, shares or any other source of revenue, then reclaiming PPI could be particularly important. Since the money that you are owed could be playing a role in your investments, you stand to gain not just the funds to which you are entitled but also the returns they could generate. Neglecting to make a claim, on the other hand, will lead you to miss out.
PPI refunds vary significantly from case to case, but the average is £2,750. Supposing you tend to invest your savings in a series of funds with returns averaging – to keep the maths simple – 10% annually. Taking the average £2,750 PPI claim as an example, reclaiming those funds and then putting them into your investment portfolio would, assuming the value of the funds rise in accordance with their average, boost your returns by £260 in the first year before charges and tax. If the investments in question are placed into an ISA, they will not even be eaten into by tax. Due to the compound nature of portfolio growth, returns in subsequent years if your portfolio maintains similar levels of performance will be noticeably larger year-on-year.
Of course, similar principles apply to other forms of investment such as stocks and shares, bonds and property.
Even if you investors do make a PPI claim later, they will still be missing out. Making one in a year’s time will still reclaim the original money, but will not get the returns that would have been earned over the course of that year. While missold PPI refunds are subject to interest, this is at best uncertain. It may or may not outpace the returns you would have received were the money to form part of your investment portfolio, and are certainly not an investment opportunity in themselves. In fact, taking the above example of investment funds, the majority of funds from major providers such as Vanguard have outperformed this interest rate on average over the past ten years. Furthermore, this interest is subject to tax, while many types of investment can be easily sheltered from this through the use of an ISA.
In short, investors who are owed PPI will mostly stand to gain more than their refund from making a claim as soon as possible.