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PAC Believes PPI Deadline Would Not Work As Expected

The Public Accounts Committee (PAC) along with other MPs believe that PPI mis-selling and other current and future financial scandals are both troubles that the FCA-sanctioned claims deadline could not stop.

The PAC said the 2018 PPI claims deadline won’t work for the best interests of consumers. It said that the elderly and disabled would be worst-hit by the deadline without proper representation and are better prone to scammers who charge up-front fees for false PPI claims.

The PAC highlighted that the PPI deadline does little for the upcoming potential financial scandals including the instances of scams using the new Pension Freedoms Act enforced in April 2015.

Meg Hiller, Chairman, Public Accounts Committee suggested that the growing menace of mis-selling of PPI and other financial products is a reflection and indicator of the risks faced by consumers in financial services market. “Many people have waited years for a decision on compensation and because of the way they have pursued their claims, even then they may not receive the full amount. Serious risks of further mis-selling remain,” she warned.

UK MPs have urged the FCA to use stronger action against the issue of mis-selling. Among suggested solutions are higher fines for issues, better education for sales personnel, incentives system based on consumer satisfaction and the return of the three FCA probes that would investigate troubles in and help improve the banking industry.

New UK Insurance Scandal Shows Further PPI Claims-Scale Scandal Potential

The Financial Conduct Authority reported it has found “serious and widespread issues with insurance policies sold to shoppers in stores and garages.”

Sales representatives had mis-sold insurance rules and regulations leading to the mis-selling of consumer product insurance to millions of consumers. According to observers the scale is possibly on par with mis-sold PPI. They added it may incite a PPI-style refund system in the near future.

Currys, PC World and Tesco, three of these companies that UK consumer group Which? once said to have misled millions of consumers to have sold an unnecessary product policy for products, have had staff who had mis-sold the warranties by using “hard sell” tactics and misleading claims on policy coverage.

Analysts said that the incident is similar to payment protection insurance mis-selling and showcases the possible future vulnerability of consumers against companies and advantage-seeking sales staff.

Being similar to mis-sold PPI, analysts mentioned three factors that often lead to mis-selling: high product volume to sell, poor salesperson education and the lack of incentives to motivate salespeople to sell the proper insurance to consumers.

The new UK insurance scandal is the second of its kind in the United Kingdom. Packaged bank accounts, wrongly-sold payment protection on mall-issued cards and UK’s new pension laws are possible financial scandal holes in the country.

Which? Continues To Condemn FCA for PPI Claims Deadline Decision

The Financial Conduct Authority’s decision to impose a PPI deadline upon the request of banks and financial institutions appears negatively towards consumer groups. The consumer group Which? voiced out that the FCA has made it easy for banks to unlikely pay consumers their rightful compensation given the time constraints.

Which? warned that the 2018 deadline for all payment protection insurance claims is an ‘ill-judged’ decision.

Today, the total bank PPI bill is now at £30 billion with only about £20bn paid out to consumers.

Which? is not confident with the FCA’s advertising campaign. The campaign aims to inform all consumers about checking whether their loan, mortgage, credit card or other form of financing is mis-sold payment protection insurance.

Which? is concerned that scammers may take advantage of the situation by asking elderly and vulnerable consumers to use their service and have proper representation for their claims. The consumer group blames the financial industry for their failure to simplify the PPI claims process for anybody intending to make a mis-sold PPI complaint.

MPs warn about the PPI deadline being an ineffective solution to possible future mis-selling scandals. Currently, MPs and observers are looking at crowdfunding and Packaged Bank Accounts as possible mis-selling scandals in the financial industry.

Crowdfunding The Next Possible PPI in the United Kingdom

The Financial Conduct Authority expressed its growing concern over crowdfunding scandals involving hundreds of thousands of pounds in money stolen from investors.

They claim it may reach heights similar to today’s payment protection insurance scandal. Except with crowdfunding, the chances of locating and refunding one’s investment is non-existent.

PPI was mis-sold by bank employees. Through aggressive sales tactics involving “rushing” consumers to sign a form that permits the sale of PPI, many UK consumers had to make a claim to refund as much as £3500-5000.

But for crowdfunding, the 100 platforms available in the United Kingdom does not have any form of insurance that would protect investors from losses.

The UK City watchdog also regulates crowdfunding in the country. It currently has a set of rules for loan-based crowdfuning and specific rules for equity=based crowdfunding.

Equity-based crowdfunding is when businesses raise money without guarantees they would return profit to crowdfunding investors.

Irregularities in system management including logistics, erroneous or fraudulent figures for profit and other criminal methods allow the liquidation of said entities and companies, leading to a loss of profit for crowdfunding investors with the business taking much for itself in losses.

 

Three Reasons To Worry About PBA Perks

Banks promoted Packaged Bank Accounts (PBAs) with perks that would help you in certain situations. As this statement is descriptive for insurance — indeed, travel insurance, PPI and even other miscellaneous discounts with merchants upon using your bank account are included with the bank account.

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Promoted and sold almost the same time as PPI, PBAs have risen in complaint numbers the past year because several perks were useless or redundant for consumers. Similar to PPI, consumers did not need them or were ineligible for the insurance policy, making their repayments useless.

The Financial Ombudsman acknowledges complaints for PBAs. They stress most of the products work for different individuals.

But you should be worried about it because:

PPI is In There

Payment protection insurance costs about £3000 per single premium policy. Consumers with compound interest on their PPI could have bigger refunds.

A consumer paying thousands of pounds for something useless or something they were initially ineligible for is not worth paying but is worth refunding.

Travel A Lot?

Do you travel a lot?

Most PBA complainants said they did not travel much but had use for other perks, such as merchant discounts or freebies. Signing up for these travel insurance policies which are useless may have been rushed in the process.  Consumers can get their travel insurance repayments refunded if they prove it to be useless on their end.

Not Financially Beneficial and Not Good To You

Consumers driven to debt consolidation or bankruptcy repaying some perks included with their PBAs have the right to refund their repayments for PBA as soon as possible.

It is possible you didn’t need gadget insurance, extended warranties, loyalty rewards or even a breakdown cover for your car because you already have one.

If the product or perk is not financially beneficial and good to you, then you have to refund your PBA perks immediately.

Claiming PPI The Right Way Before The Deadline

Almost all UK finance analysts believe the Financial Conduct Authority is leaning towards giving the banks what they want: a PPI claims deadline.

The issue whether this move is fair or unfair is out of the window. What matters now is that consumers need to make a claim as soon as possible with a guaranteed refund period.

The FCA’s advertising campaign may not gain much mileage because the actual PPI claims process can be confusing for anybody taking it on for the first time.

So here are the three steps you’ll need to make your PPI claim successful.

How Were You Mis-Sold PPI?

The billion-dollar question is if you can still remember how you received the payment protection insurance policy?

If you do know that you were mis-sold PPI, the next trouble is knowing the account number of the financing it attached to.

And most consumer forget this little fact, which can be a very big issue.

Is The Refund Enough?

How do you know if you’ve received enough refunds?

Going back to the story of a certain consumer with two credit cards, Roberta took out her credit cards when she was self-employed not knowing she was mis-sold payment protection insurance on both credit cards.

She had held these cards for six years. We can confirm that:

Roberta is ineligible because she is self-employed

The PPI policies are compound policies, which mean they increase when interest rates increase.

She had paid about £3000 for her base policy, which increased in value because had become a high-risk consumer during certain periods.

Upon final calculation, she received a total of £32,000 for both policies.

A calculator is essential to know your possible refunds from your PPI policy.

A Claims Representative

Analysts expect millions of consumers who have yet to make a claim to come forward. The lines will be long, rejections will be plenty and the workload on paperwork would take its toll on your daily schedule.

It would be wise for anyone burdened with claiming PPI to use a claims representative to reclaim their refunds. Most work on a contingency fee basis, meaning if they do not get the work done, you do not pay for anything.

The Difference Between Direct Redress and PPI Refunds

To address the confusion that comes with these two concepts, it’s time to clarify what the two actually are. About 5 in 10 cases find that they want to refund their direct redress or PPI alone.

Here are a few things to know about the two to help you and your claims representative achieve your goals quickly.

Direct Redress

Direct redress is all about getting your interest rates back from financing the PPI affected. It can be multiple financial accounts affected by the PPI.

About thirty years ago, PPI was sold alongside loans, mortgages and credit cards. Some of these single-premium PPI increased in value as the financing itself increased its interest rate. PPI premiums increase when the consumer becomes a high-risk client. However, this returns to its original value when the consumer becomes a low-risk client once again.

The increased PPI premium needs to be calculated and estimated before being refunded to consumers.

 

PPI Refunds

PPI refunds are simple if they have a fixed premium associated with them. If your insurance policy only covers one of the three aspects it includes (accident, sickness or unemployment), then you can have a flat-rate insurance.

Claiming fixed-premium PPI refunds are easier as you would only need to prove you were mis-sold PPI. There will be no need to recalculate your interest rates.

FOS Levies May Be ‘Disproportionate’ Over PPI

Seven responses to the FCA’s consultation on fees regarding the PPI deadline expressed concern that PPI had relatively huge fee when processed with the Financial Ombudsman Service.

According to its new statement on regulated fees and levies for 2016 to 2017, the Financial Conduct Authority said it would have advisers contribute 2 per cent of the total FOS levy of £24.5m or £490,000.

Several consulted said the size of the levy is disproportionate to the number of PPI complaints. With many of the FOS’ workload focusing on PPI, the general charge is unfair.

In response, the FCA stated: “We do not believe that the levy on any particular fee block is disproportionate, given that the levy is a small part of the overall Fos budget, and all levy payers benefit from the existence of the FOS.

The comments we received about claims management companies and case fees are not relevant to the consultation question, as the FOS consults separately on its case fees.”

The FOS said: “We will be consulting in due course about the allocation methods in respect of the levy for the new money guidance body.

“It is expected that the new body will be operational by April 2018 and that it will be accountable to the Treasury with the FCA’s role limited to collecting the levy.”