The Financial Conduct Authority has sent a clear message to the consuming public — the UK PPI claims is to end by June 2019 — and the advertising campaign would reinforce this message continuously until after two years. Consumers mis-sold PPI could receive more than £3000 on average for their banks’ misdeeds. However, not everyone is prioritizing payment protection insurance when they should be because:
This is Your Money
Banks — including high street banks — are involved in the biggest financial scandal of the United Kingdom. In fact, UK taxpayer-backed and biggest PPI mis-seller Lloyds is still committing errors in providing proper recompense for banks, along with almost every bank in the country. if they make an error on any consumer’s banking detail, that consumer will need to try once again — waiting another quarter for results.
The Longer Lines
The closer the deadline gets, the advertisement urges more people to make their PPI claim. It is true that after the PPI deadline, the FCA would not honour requests to re-assess certain insurance troubles. However, the public legal backing for PPI will not be honoured, making finding legal aid for the case once again difficult and expensive.
As banks are likely to “harden up” after the PPI claims deadline, they may also use unscrupulous methods to strip once again off a few amounts from your recompense. They can do this easier without legal probes from the Financial Conduct Authority and the Financial Ombudsman trailing their every move.
Lloyds Banking Group has the largest mis-sold PPI allocation equivalent to £16 billion out of the £40bn estimated total PPI recompense package for the country. Per quarter, the taxpayer-backed banking giant had allocated more than £1 to £2bn. Its full year results for 2016 signify that it had repaid lower amounts for PPI garnering a profit increase of 158% due to lower allocations for mis-sold PPI.
Lloyds shares increased to 69.2p with a 3.7% jump an hour after the opening of the markets. However, Lloyds is still tarnished after having committed breaches over PPI rules — specifically a gaffe in handing overcharged and wrongly-assessed annual statements to more than 200 PPI customers who had repaid the amounts.
Lloyds reported a total income of £17.5 billion. A reduction of 3% in its operating costs had helped boost its profits — which the bank attributes to the £1.6 billion investment it made to “simplify the business.” According to Lloyds Chief Executive Antonio Horta-Osorio, the “simplification and the transformation” of Lloyds’ business is done; the bank will now focus on “delivering the best customer experience” through development of the bank’s financial technology advancements.
Horta-Osorio stressed that the bank is now focused on a “simple, low-risk business model” which he considers to be “the right one.”
Mis-sold PPI is refundable still after the PPI claims deadline — but the banks and authorities will not recognise the support of claims management companies. CMCs — which have business relationships with banks to ease the management of mis-sold payment protection insurance policies — will find themselves out of business after the deadline. But for consumers, three ways to claim refunds still exist.
The Financial Ombudsman Service is dedicated to resolving all types of issues consumers might have with their bank. The PPI claims deadline can pass but the FOS is still required to defend consumers and align product parameters to consumer protection laws — which means the FOS would still decide on any payment protection insurance claim.
The Financial Conduct Authority made clear the PPI claims deadline only pertains to banks and not insurance companies themselves. Most banks work with third party insurers — which would honour PPI inquiries from a consumer’s legal representative. If the product is truly mis-sold, the insurance company is required to refund it by law.
By law, consumers are and will still be on the right side of protective law. To go beyond it would mean the law is bent or even broken deliberately. A bank complaint left unresolved by the bank could mean a grievance, which would mean the legal courts proceeding with the consumer’s action.
According to a claims management firm in Scotland, they have secured second payouts for Scottish consumers who were initially given unfair refund and compensation for their payment protection insurance claims. New legal loopholes — according to Scotland Herald — are “delivering unexpected first or second batches of compensation.”
Legal loopholes such as having compensation for an early lender shutdown on their claims have helped borrowers reclaim more than their refunds as PPI compensation values increase. Also, the Plevin ruling may also apply its landmark decision applied for all consumers mis-sold PPI. Susan Plevin’s case could mean financial advisers and insurance agents who profited more than 50% from the actual PPI price sold could have their PPI refunded on grounds the sale is invalid.
UK’s mis-sold PPI scandal has earned more than £40bn in total profits lost by banks with half of the amount repaid to consumers. The new legal loopholes may also increase banks’ administrative costs as consumers may seek the opportunity either to refund their insurance policies despite legitimate selling or claim an unfair initial compensation amount from their banks.
The new Scottish rule could help consumers who were turned down initially to reclaim their true compensation amount. In addition, banks who do not disclose their commission would need to refund the PPI repayments.
Money Saving Expert founder Martin Lewis shares that UK’s biggest financial scandal is not exclusive for those mis-sold the insurance policy. Mr Lewis said the groundbreaking implications of Susan Plevin’s case involving high commission consumers owning PPI could use to reclaim their monthly payments.
The Susan Plevin case against Paragon Personal Finance had the UK Supreme Court rule in her favour. The Court ordered Paragon refund her for her invalid payment protection insurance due to “substantial commission” received by Plevin’s financial adviser. Mr Lewis said the amount for “substantial commission” is likely more than 50% of the financial adviser’s commission from the insurance product.
If the landmark case indicates the amount to be as high, PPI owners who were not mis-sold the insurance policy could make a PPI claim. However, the caveat still stands whether these claimants could receive their 10% PPI compensation — a matter that the City watchdog and the banking industry must clarify before applying the Plevin argument.
The UK Supreme Court, the Financial Conduct Authority and the banking industry must ensure the application of the Plevin argument before the end of 2017 to allow consumers to make a claim immediately before the appointed June 2019 deadline. So far, the payment protection insurance mis-seling scandal had earned more than £40bn in the last seven years.
The City watchdog had written that “serious” breaches in bank ethics and conduct had Lloyds commit overcharging against many customers. The breach of PPI rules set in place by the Financial Conduct Authority in 2011 may have Lloyds see huge fines in the coming days.
According to the Competition and Markets Authority, Lloyds overlooked sending hundreds of customers their yearly financial statements — with some having incorrect information that consumers had paid. The CMA estimates about 200 customers overspending on their PPI premiums due to Lloyds’ error.
Consumer groups and claims companies were concerned as Lloyds’ issues might bring up other troubles in the 18 biggest PPI mis-selling banks in the United Kingdom, which could mean the £40bn bill is still short of the actual total mis-sold PPI bill. Lloyds had faced a fine of £117m in 2015 for mishandling PPI complaints.
Whether or not new fines could arise for Lloyds, it can still minimise its expenses given the leniency of the FCA as it intends to impose a PPI deadline. Using a marketing and advertising campaign, the FCA intends to inform all consumers possibly mis-sold PPI to come forward and make a claim. Consumer groups said the deadline was unfair for consumers as banks are still unable to improve its processes for PPI claiming.