FCA tries to find an end to interminable PPI claims
We’ve all heard of PPI by now, and in fact it’s now one of thise things that just won’t go away- just ask anyone who is still plagued by automated phonecalls asking you to submit a claim. However, new proposals from the FCA could see a light at the end of the PPI tunnel, with a proposed new deadline by which to make a claim, or lose the right to do so.
It seems only common sense- after all this has been rumbling on since the substance hit the fan in 2007 and so far 16.5 million claims have been made, of which 75% were successful, meaning that £21bn in redress has been paid to over 12m mis-sold customers. Banks still show contingency funds in their balance sheets in case new claimants come out of the woodwork. Banks have also been asked to identify those at high risk of having been mis-sold PPI and to write to them- with 4.8m out of 5.5m letters having already been sent totry and wheedle out new claims. Surely now enough is enough?
But of course the FCA haven’t just arbitrarily decided to close the floodgates, they have, in fact, been investigating the whole sorry PPI mess, and have published some research alongside this week’s recommendations.
Their evidence suggests that:
“a high and growing proportion of PPI complaints are made through CMCs, with fee costs to the consumers who use them;
a high and growing proportion of PPI complaints relate to older PPI sales, where the documentary evidence held by firms and consumers is likely to have significant gaps, and recollections and oral evidence are becoming increasingly stale and;
a significant proportion of PPI complaints turn out not to have involved a PPI sale"
Which basically means that current claims are either noT claims at all, are founded on patchy information and sketchier memories or are possibly just lining the pocket of those oh-so-annoying claims management companies (CMCs).
The FCA also found that “around three quarters (74%) of the consumers we surveyed have heard of PPI as a product, most of whom (77%) say they are aware of problems or issues with it” which suggests that it is not lack of awareness that is the problem in bringing any outstanding claims. However,they also found that “the perceived open-ended nature of the complaints-led approach to PPI redress appears to contribute to a significant degree of consumer inertia and does not push or incentivise consumers to check if they had PPI”. Or, in other words, people just can’t be bothered to get round to it while there’s no end date in sight.
As a result the FCA are now proposing that a two-year deadline be imposed, meaning that anyone who can’t get their act together in that time loses out. This would be accompanied by a ‘high profile’ consumer communications campaign to not only inform people of the impending deadline but also to hopefully encourage more people to DIY rather than using a slippery company for a hefty fee. The FCA think this would “bring the PPI issue to an orderly conclusion…helping rebuild public trust in the retail financial sector”. Yeah, right.
However, no matter how sensible this all sounds, you can never please everyone, and Which? executive director, Richard Lloyd, was heartbroken, saying that
“it’s hugely disappointing that the regulator is pushing ahead with a blanket PPI time limit. Instead of rewarding the banks that have dragged their heels over paying out compensation, the FCA should be requiring firms to proactively seek out customers owed money. Relying on consumers to complain, when many were unaware they’ve been a victim of mis-selling, has clearly not worked.”
Still, one can only hope that reading about the proposals might even spur people into action even if the deadline doesn’t end up coming into force- in case you are so inspired, Which!! do have a handy tool which will generate a letter for you to sign and send off to the relevant credit provider.
At this stage, the deadline is just a proposal, and the FCA are seeking views on the proposals until February next year- and you can even offer them your response via an online form if you so choose.