UK’s PPI scandal spans almost half its entire population with consumers paying an average of £3,000-5,000 for an insurance policy that initially renders them ineligible for its benefits because it was mis-sold. To spur UK consumers to make their claims immediately and avoid prolonging the scandal, the Financial Conduct Authority had approved a PPI deadline by August 29, 2019.
According to We Fight Any Claim, a claims management group, the FCA’s approval of the deadline is unlawful because it breaches the responsibility of the FCA by constitution to defend and protect the consumer. The CMC had threatened the FCA with judicial review should it consider an unlawful move in such a form. Stephen Knafler QC, commissioned by the CMC for a legal opinion on the matter, said the move was “probably unlawful.”
Consumer groups have also condemned the setting of a PPI claims deadline given that banks have yet to improve their claims services for consumers. Hiccups are common in the decisions of UK banks regarding PPI claims — with most rejected claims coming into the Financial Ombudsman approved seven out of 10 complaints.
The UK’s PPI bill is set to go beyond £40bn as the FCA had released guidelines that the landmark Plevin v Paragon Personal Finance had established. All commissions above 50% undisclosed to end-consumers of PPI could have the latter consider the PPI as mis-sold.
The Financial Conduct Authority notes that only about one out of five consumers are making claims regarding their payment protection insurance — an initial expectation as its “Consumer Communications Campaign” has yet to launch as advertising firm M&C Saatchi is currently developing its message. The PPI claims deadline was announced early March and it lands on 29 August 2019.
Majority of consumer groups have condemned the decision given that the FCA’s handling of the scandal is in favour of the banks. Which? said that banks have yet to be pro-active with helping consumers know more about their possibly mis-sold payment protection insurance. Moneysavingexpert founder Martin Lewis said it is “flabbergasting” to see the Financial Conduct Authority side with banks as the consumer public have yet to trust them that they would not commit these same errors with future financial products and services.
However, Citizens Advice supported the decision seeing that it would “help to draw a line under the ongoing scandal.” Its main concern is to ensure that all complaints are handled effectively.
FCA Chief Andrew Bailey defended the decision to impose an August 2019 deadline. He mentioned that consumers are not urged to make a complaint unless a deadline is in effect. Along with their public address campaign in the form of an advertisement, the City watchdog hopes to make progress with payment protection insurance.
Payment protection insurance is mis-sold to 3 out of 5 UK borrowers, which means any borrower from the 90s to the year 2010 is likely paying for an insurance policy they are likely ineligible for or could not use. Any borrower who purchased an insurance policy upon a bank employee or financial advisor’s insistence has the right to reclaim their refunds — and in doing so gain the following perks.
The average payment protection insurance refund is about £3,000 and may likely have an additional £300 for PPI compensation, calculated per year by APR. Any consumer repaying their PPI and encountered numerous issues in the process could be recompensed for all expenses they encountered — such as an inflated repayment amount due to interest rates for unpaid PPI policies.
Another is to ensure they get their claim processed before the August 29 2019 PPI claims deadline. The Financial Conduct Authority had confirmed the PPI deadline for 2019. Consumers who process their PPI claims early can retry the process with the Financial Ombudsman with ample time to see whether banks rejected a valid complaint.
Lastly, making a claim also helps the banks streamline their PPI claims process. Admittedly, bank systems for PPI refunds could do better but it is only through pressure and experience could banks improve their services. Do a favour for almost every UK consumer by making the process easier.
The Lloyds Banking Group had added a further £350m to its PPI recompense package in anticipation for a bigger number of PPI complaints before the August 29, 2019. Lloyds said the additional PPI provisions is in anticipation of the number of Plevin cases that could come in the next few days.
According to Lloyds, the new Plevin guidelines requires banks to contact customers who had made an earlier complaint for PPI especially if their financial advisor or bank employee had earned more than 50% in commission without disclosing this information to the customer.
The Plevin guidelines — as defined by the UK Supreme Court siding by Susan Plevin against Paragon Personal Finance — would refund consumers mis-sold PP if the sale representative did not disclose their amount of commission to the consumer before selling them the insurance policy.
The Financial Conduct Authority had announced last March 2 that August 29, 2019 would be the last day for claiming payment protection insurance refunds. Consumer groups expressed their disappointment with many saying banks are still lacking proactivity with contacting consumers possibly mis-sold PPI and a correction overhaul in their system with the FOS still declaring 50% of reviewed complaints in favour of consumers.
Claims management company We Fight Any Claim has filed a judicial review of the Financial Conduct Authority’s actions based on Stephen Knafler QC’s conclusion that the FCA will breach its “responsibility to the public consumer” by siding in favour of banks through a PPI claims deadline.
The Financial Conduct Authority finally confirms that payment protection insurance claims would end by 2019 August. Despite consumer setbacks and the outcome of a legal contention between consumer groups and the City watchdog, it would be best to remember these three things in the next two years as one plans to reclaim their refunds.
Consumers have the right to access information regarding their insurance policies more than the six years worth of records banks present upfront. A data access request could cost about £10 and could pull out more than 10 years of information regarding a financing — specifically useful for mortgage possibly mis-sold payment protection insurance.
Claims management companies have special arrangements with banks regarding making complaint — which makes them popular despite consumer groups advising against using a “middleman.” CMCs could facilitate complaints faster and some are integrated with high street bank systems. Most work on a no-win no fee basis, making the burden lighter for consumers.
Lastly, consumers should expect their claims against their bank likely to fail. MoneySavingExpert and Which? contest that the FCA gave banks better protection than consumers because banks have yet to improve their PPI claims processes. The Financial Ombudsman Service’s figures indicate that 50% of complaints from consumers are still in favour of consumers — indicating that banks are still unfairly refunding consumers.
On March 2, 2017 the City watchdog confirmed that mis-sold PPI claims would be final by August 29, 2019. The FCA confirmed that it would have M&C Saatchi and Gottlieb-Manning OMD to oversee a public service “consumer communications campaign” that would begin in August 2017. The advertisement would provide instructions on claiming PPI against one’s bank.
According to FCA Chief Andrew Bailey, the deadline would help mis-sold PPI victims to “take action” rather than delay their processing of complaints. He said that the FCA has considered all feedback from their public consultation and it believes that a PPI claims deadline would “greatly benefit consumers.”
Consumer groups including Which? are opposed to the deadline stating that the UK banking industry has yet to streamline its PPI claims process. According to Which? Campaigns Director Vickie Sheriff, the banks should be “working much harder” in proactively resolving consumers complaints — a task they had failed and left to claims management companies.
MoneySavingExpert founder Martin Lewis said the deadline is “flabbergasting.” He said that still a 50% uphold rate for consumers exist in the Financial Ombudsman for most banks. Lewis added that consumers could not give banks the trust to “deal with complaints fairly” because most of their rejected complaints are wrongly-judged.”