The City watchdog has promised to put to light the unfair practices of some claims management practices and to enforce tighter rules in the industry that has made billions over the banking industry’s mis-selling of payment protection insurance policies.
In its published draft of CMC regulation, which it intends to pass on April 1, 2018, Chief Executive Andrew Bailey stated that CMCs are necessary to help provide justice and provide redress. The FCA designed the rules in a way that will root out poor conduct and make CMCs “trusted provides of high-quality, good-value services.”
Part of its new implementations talk of legitimate procurement of “lead lists,” which CMCs use to obtain a consumer’s name, and having to state the alternatives to claims services, such as the Financial Ombudsman in their marketing and pre-contract disclosures.
According to First4Lawyers’ Qamar Anwar, the tighter CMC regulation is a great step towards improving the sector’s reputation and performance. He believes the new rules will help the consumer navigate an “alien industry at a difficult time.” Anwar adds that CMCs will not be seen as “call centres with little regard for the well-being of those they’re trying to contact through cold calls and text messages.”
The Financial Conduct Authority’s PPI claims commercial featuring the animatronic head on tank treads and the voice of Hollywood Star Arnold Schwarzenegger has seen great success. However, MoneySavingExpert founder Martin Lewis said the advertisements are misleading. He believes the advice provided can trap consumers into paying for their PPI claims.
The commercials featured Schwarzenegger’s disembodied head walking on tank treads telling consumers and bus passengers to “do it now” and make a claim for their mis-sold insurance policies. However, it commands consumers to search Google for “FCA PPI” instead of providing an actual URL directly to the FCA’s PPI page.
Lewis said search engine algorithms will use this keyword to display primary advertisements from claims companies who would charge a substantial fee if they can make your complaint gain success and refunds. In search engines, organic unsponsored results often appear below one or two company advertisements related to a particular keyword.
PPI is the biggest UK financial scandal in history. It has gained the bank industry over £40 billion in refunds and penalties. About £25 billion had been returned to consumers. The FCA has made its decision in March 2017 to impose a PPI claims deadline by August 29, 2019. All complaints performed after this date will not receive any support from the regulator.
An animatronic Arnold Schwarzenegger hilariously greeted TV viewers in the last few days in the FCA’s latest advertisement that advertising agency M&C Saatchi had developed specifically for payment protection insurance claims. According to observers, the FCA is hoping to “annoy” consumers into making a complaint or inquiry regarding their insurance policy before August 29, 2019, the appointed PPI claims deadline.
Arnold Schwarenegger’s real voice was used in the advertisement. However, his representation is a funny, sketchy version that pops out of nowhere with a message: “Do it now.”
The message reflects the FCA’s call to all consumers nationwide to process their enquiries at the soonest possible time. The City watchdog believes UK’s consumers do not find it compelling to process their PPI claims because there is no deadline or deterrence for them to do it without trouble.
However, consumer groups rebut the FCA’s statement, stating that consumer morale to make a complaint is low because of the incompetence of the banking industry to make the complaints system integrated and simple.
The City watchdog has called on the financial sector to improve its services for customers complaining about their wrongly-sold financial products. However, the banks have yet to show signs of improvement in the system to have them do the complaints by themselves and not with CMCs.
Many consumers have no idea they were mis-sold the insurance policy firsthand.
During the 90s up to the year 2007, bank employees recommended that loan-applying consumers purchase payment protection insurance policies.
They presented the policies as ‘crucial’ for loan application success given that a PPI removes the risk of the consumer’s inability to pay during his or her sickness, unemployment or accident stages in life.
But PPI’s provisions are not general. As with any other insurance policy PPI is designed for specific and eligible individuals. Bank employees removed the right of consumers to choose a PPI company of their own choice.
About 50% of the UK population think they may be mis-sold PPI. The reluctance of the banking industry to help resolve consumer issues quickly had further made it difficult to ascertain whether a consumer has payment protection insurance policies.
The huge income of claims to banks and the Financial Ombudsman Service is no fault of the claims company who only processes the claims to find out if it was truly mis-sold. The Financial Conduct Authority had once called on banks to call consumers who were mis-sold PPI based on their records — this responsibility they shunned that could have avoided their current troubles.
The FCA-imposed PPI claim deadline is unfair to consumers but banks will suffer huge losses by June 2019 because PPI is still on the rise due to their own fault.
Third quarter results reveal that four high street banks are increasing their PPI provisions totalling up to £2bn. Barclays, HSBC, Lloyds Banking Group and Royal Bank of Scotland will be indicating their additional top-ups for their PPI refund and compensation.
According to sources, the £2bn collective PPI provision would be added before the FCA confirmation of a 2019 deadline for PPI claim.
Lloyds is likely to pay more than the other banks. Currently, it has the highest total for PPI compensation reaching about £16bn in total.
The new addition comes despite the perceived slowdown on PPI claims during the first half of 2016 compared to 2015 during the same time period.
PPI compensation payouts are also down by £405.8m in April to £266.8m the following month and even up to £244.6m in July.
Banks are struggling to pay fines for PPI processing issues and other regulation troubles they face during the time. PPI may have also increased due to the Plevin case. The case centred on defining a “substantial” fee where a broker must disclose their commission payment to their customer.
Banks may also pay higher than £2bn in the coming years as the FCA extends its PPI claim deadline to another year.
How does a consumer know they were mis-sold PPI?
A quick call to the bank asking if they are one of the possible mis-sold consumers would confirm it.
Another way is to remember whether their bank representative handling their insurance purchase or financing application told them PPI was optional or they could choose an insurer that would have a product suited for them.
To prove both, you’ll need paperwork. Without paperwork, your claims would be unsatisfactory.
But did you know you could claim PPI without paperwork?
Did you know that most consumers could not make a claim because they lack their paperwork? You may be one of them and this is your chance to succeed.
Banks offer a service called the data access request. This allows consumers to request for information that dates back to more than six years from 2016.
Loans, credit cards and other financing made from 2010 will still have their information preserved. But consumers may have to pay an additional fee of £10 per request.
Some claims management companies have tie-ups with banks that allow them to use the data access request to effectively see whether the prospective consumer could lodge a formal refund claim to their bank.
CMCs can also help them in case banks refuse their claim and they need to re-submit their claim to the Financial Ombudsman Service.