Payment protection insurance could last longer than 2019. The Financial Conduct Authority has held its PPI claims deadline decision, which could mean additional PPI provisions for banks in the near future. Bank share prices including taxpayer-backed Lloyds fell by 1.36 per cent after the FCA’s announcement of a delayed decision.
UK banks currently have £40bn earmarked for PPI and they have repaid more than £20bn to consumers mis-sold the insurance policy. However, a campaign group said banks are saving £23bn from refunds due to the PPI claims deadline.
According to new campaign group Payback Time, UK’s banks are swindling £20bn from UK consumers for halting PPI refunds through the FCA’s June 2019 deadline. Due to banks failing to inform consumers probably mis-sold PPI, claims management companies had helped push up administrative costs, disabling banks from ascertaining the exact refund package they need to allot for their PPI misgivings.
PPI is still the UK’s biggest financial scandal in history. The insurance policy was sold alongside loans, credit cards and mortgages without consideration for the customer’s age, employment and health status. As a result, millions of UK consumers are deemed ineligible to claim for their benefits when situations arise.
The banks can grab back more than £23bn in unpaid payment protection insurance compensation once the Financial Conduct Authority approves of the June 2019 PPI claims deadline. A report indicates that the £42.2m bank-financed PPI advertising campaign is just a small chunk of the possible £23bn PPI refund money banks can pocket after the deadline.
According to City AM, a new campaign group called “Payback Time” warns consumers that the proposal for a PPI deadline in early 2017 will limit the true figure of the PPI scandal. New proposals such as the £42.2m advertising campaign for the possible June 2019 PPI deadline is just a small amount from the total £23bn more the banks owe its customers.
Surveys by YouGove designed to help launch the Payback Time campaign found that people thought the government had not done enough to improve bank customer service and about half of the respondents said banks still need to inform consumers that less than half of the actual PPI refund amount is still unpaid to their bank employees’ victims.
The FCA has yet to finalise its planned deadline to the disappointment of banks. Consumer groups continued to condemn the PPI claims deadline mentioning that it was unfair for customers who were sold PPI for at least a decade. Currently, the UK bank industry’s total for mis-sold PPI is at £40bn with around £14 paid back to consumers.
The FCA has already placed a temporary deadline for payment protection insurance claims on June 2019. It was a move further than the initial Spring 2018. Banks brace for further mis-sold PPI compensation as the FCA further delays its statement regarding the PPI deadline.
Further deadlines for banks will result in higher recompense allocations due to administrative and refund costs. During the deadline move from 2018 to 2019, banks had expressed their disappointment with the Financial Conduct Authority and analysts speculate the industry would add a collective £2bn further until the deadline.
Currently, the total PPI bill is at £40bn with banking giant taxpayer-backed Lloyds leading with £17bn. It is the biggest financial scandal in the history of the country.
The regulator said it would consider all results of its consultation with consumers, banks and claims management companies. Consumer groups have expressed disappointment for the initial deadline proposal stating that it took a decade for banks to sell and profit illegitimately with mis-sold PPI. They said cutting consumers short of time for reclaiming their insurance repayments is unfair.
According to the Competition and Markets Authority, the ballooning value of the mis-sold PPI refund total is due to banks failing to send a notice to consumers of the possibility they are mis-sold the said insurance policy. Taken over by legitimate claims management companies — using trial and error methods to see whether their potential clients have mis-sold PPI — administrative costs have inflated over the years since 2010.
The UK banking industry continues to sell payment protection insurance policies — this time to eligible customers — and continues to bring in profits from the product. Employees said that managerial pressure to sell higher volumes of the insurance may push further the likelihood of mis-selling to ineligible consumers. This premise and the fact that millions of consumers will fight to have their insurance policies reclaimed are the challenges awaiting the June 2019 PPI claims deadline.
The FCA has agreed to have UK advertising giant M&C Saatchi and advertising logistics Gottlieb Manning OMD to develop the public service announcements as part of its June 2019 PPI claim deadline campaign. Analysts view the efficacy of the campaign as probable but it will raise consumer awareness regarding payment protection insurance.
The UK banking industry has allocated more than £40bn to the refunding of mis-sold PPI. It is the biggest financial scandal in the United Kingdom’s history.
The Royal Bank of Scotland faces huge fines duet o issues surrounding its banking practices aside from payment protection insurance. Due to its selling of toxic mortgage securities before the 2008 financial crisis, RBS faces huge fines from US regulators. It owes more than £800m to settle lawsuits from its investors regarding its 2008 emergency rights offering.
With many issues in tow, PPI claims may continue further than 2019, sparking uncertainty over investors.
The FCA has contacted the two most prominent advertisers in the country to plan and execute the £42m bank-funded advertising campaign in an effort to help all UK citizens to claim their mis-sold PPI refunds before the PPI deadline on June 2019. The two advertising agencies will launch the ad campaign by June 2017 — two years before the deadline.
FCA has hired M&C Saatchi for developing the advertising brief. The advertising agency will create a message that clarifies the procedures to claim mis-sold PPI and inform consumers of their rights to claim their refunds. Manning Gottlieb OMD will handle media buying and asset management.
Mis-sold PPI is the UK’s biggest financial scandal in history with a total refund amount of £40bn — £25b of which banks have returned to consumers. Taxpayer-hauled banks Lloyds and RBS have the biggest PPI refund allocations.
Lloyds has set aside more than £17.1bn for PPI while RBS is at £4.7bn. Other “big banks” are HSBC with £2.9bn and Santander with £1.6bn.
Despite the upcoming deadline, PPI complaints still come out on top of the Financial Ombudsman Service’s queue. The Ombudsman said it receives an estimated 43,000 PPI complaints per quarter with 70% of the bank-rejected claims ruled in favour of consumers.