The UK’s biggest financial scandal also offers its biggest lesson. It was during the height of the PPI crisis that banks learned many lessons the hard way. Aside from financial institutions, legislative and regulating bodies learned their respective lessons as well. The Financial Conduct Authority surpassed the powers of its predecessor, the FSA, to improve its overview of bank activities and structures.
Abusive banking practices are now met with harsh penalties. However, the “scare” method is not enough to force banks to improve their sales methods and services. The FCA now has power to look into bank systems, especially incentives structures, which help them foresee possible PPI-scale scandals in the near future.
The PPI scandal has indirectly contributed a positive development to Europe’s Insurance Distribution Directive. By enforcing the regulation and laws used in the United Kingdom, the EU ensured banks had no overdrive when it comes to unscrupulous banking tactics.
The Financial Ombudsman Service also proved to all businesses that resolution through mediation is important. Financial sector confidence still remained with the FOS’ efficient resolution of improperly-rejected PPI complaints. However, it had to scale up its operations to meet the increased demand of consumers. In 2012, during the peak of the scandal, the FOS handled up to 5,000 complaints on a weekly basis.
The Financial Conduct Authority made its final decision for the deadline on PPI claims. By August 29, 2019, consumers cannot make a claim. However, the media has portrayed this erroneously. Reviewing the legislative rights of consumers, any UK client can make a complaint about a financial product and receive the proper redress at any time.
If anything, it is the government support that will disappear. Consumers will be left to fend for themselves after the deadline. If you wish to make a PPI claim, then you just need to do these three.
Claims management company representatives are not solicitors. Therefore, you cannot ask help from any CMC after the claims deadline. However, solicitors tied with these companies can help you. Consult with them and assess whether it is within your right to file a complaint. It can be lengthier than a typical PPI claim process, but you will get your refunds in full, too.
The Financial Ombudsman Service
The FOS is responsible for mediating issues between consumers and companies. In essence, they must be willing to resolve all financial product issues even after the claims deadline. In any case, they will remain the only avenue for non-legal resolution between banks and consumers.
The Bank Itself
By law, banks must resolve all consumer complaints in full. This means as a client, you have the right to complain about any of their products or services. After the deadline, you can still file a complaint. However, there are no guarantees regarding the resolution of your complaint. Without government guidance, it may take longer to process your PPI complaints.
The Financial Conduct Authority’s March announcement of the PPI claims deadline and its subsequent advertising campaign gave only partial motivation to consumers. According to analysts, PPI figures have already increased by 14% from January to February. Many consumers and claims management companies viewed the FCA will not play neutral regarding the mis-sold insurance scandal.
The City watchdog’s announcement of the deadline came with an explanation. It believes UK’s consumers will be better motivated to make a claim with the presence of finality in the issue. The FCA set the PPI claims deadline on August 29, 2019. It came as a relief to banking institutions. However, the watchdog made it clear that banks have to step up their efforts in resolving the insurance scandal.
CMCs and consumer groups highlight the inefficacy of financial institutions to provide a simpler complaints solution. The process remained lengthy and continued to reject legitimate consumer claims. The FCA said it would fine any financial institution evaluating legitimate complaints with unfair methods.
Meanwhile, UK’s biggest banks claim they are “finished” funding their respective complaint funds. However, they received enormous complaint figures this year. Lloyds received an estimated 600,576 complaints. Barclays received 446,978 complaints in the first half of 2017. RBS received 278,594 in the same timeframe.
The Clydesdale and Yorkshire Banking Group (CYBG) had set aside £403 million to provide refunds to consumers mis-sold payment protection insurance from the 90s to the early millennium. The National Australia Bank is now facing £671 million earmarked for the financial scandal. CYBG will only shoulder 9.7 per cent of the allocation mentioned.
No other bank aside from CYBG declared additional funding for their compensation package. According to Lloyds, Barclays, and RBS, they are “finished” in providing funds. However, RBS is still facing massive fines from US regulators and its Department of Justice pertaining to its toxic mortgages sold in 2008 before the financial crisis.
The CYBG group attributes the growth of their insurance scandal refund package due to the increased awareness caused by claims management company campaigns and the FCA’s ad campaign.
The city watchdog reports that PPI complaints have increased during the first six months of 2017 by 24% compared to the previous year. Figures show it has reached 1.1 million compared to reaching an approximate 900,000 complaints in the previous year.
The FCA also promised that in line with its PPI ad campaign, it would regulate banks’ efforts to simplify its claims process to the benefit of consumers.
Two of the UK’s biggest banks announced that they have set aside enough provisions to resolve their PPI refunds by August 29, 2019. Barclays, Lloyds, and RBS said they have turned a profit after revealing their third quarter performance results to the public.
According to the RBS, who was riddled with other violations pre-financial crisis, it had good figures for refunds and profits by the end of October 2017. However, it has to address a US Department of Justice fine for its toxic mortgages that were sold in 2008.
Meanwhile, Lloyds had set aside enough and has a backup fund to address possible fluctuations in refunds for the coming year. Barclays also said it had set aside enough money to address any legitimate complaint for payment protection insurance.
In September, the Financial Conduct Authority said it would be stern with banks as they develop simplified ways to file complaints and reclaim refunds. It said it was the responsibility of the financial sector to ensure all consumers receive their rightful refunds if they make a claim.
The watchdog also said its decision for the PPI claims deadline is final. It intends to have all mis-sold customers to come forward through a public advisory in the form of an advertisement, which has aired lately with the animatronic figure of Arnold Scwharzenegger and his voice urging consumers to make a decision.