The PPI mis-selling scandal has plagued the UK banks for nearly a decade. Payment Protection Insurance (PPI) policies were incorrectly sold to thousands — if not millions — of UK consumers during the 1990s and early 2000s. When the scandal came to light, the banks were fined and began refunding customers who contacted them with complaints.
But an end date is in sight for the banks and consumers. To encourage individuals who have not yet made a claim to do so, the Financial Conduct Authority (FCA) set a deadline for consumers to submit their complaints.
The PPI Deadline
The PPI deadline is 29th August 2019. A two-year advertising campaign featuring Arnold Schwarzenegger began in 2017. Many people have been encouraged to submit a claim because of the deadline — with the banks and claims management companies reporting an increase in cases.
With just six months left until the date, consumers will need to act soon to make sure they don’t miss out on a potential refund. It’s estimated that over 60 million PPI policies were sold in the UK — it’s likely that many of these were mis-sold and are eligible for refunds.
How PPI Has Affected the Banks
To date, the banks have paid consumers over £33 billion for mis-sold PPI policies. Lloyds Banking Group has taken the biggest hit, paying nearly £20 billion for the mis-sold insurance policies. The banks have not only paid to refund customers but also fines to the FCA and for the PPI deadline advertising campaign.
The average claimant receives £,1700. However, some individuals had more than one PPI policy, meaning their payout has been much more significant.
The Plevin Ruling Means More People Can Claim PPI
A landmark PPI case in 2014 gave even more people the opportunity to make a claim. The case of Mrs Plevin vs Paragon Personal Finance highlighted a high commission on her PPI policy. She was not aware of this when she bought the policy and argued that this was another form of mis-selling.
The court ruled in her favour and she received a refund. Now, all individuals who had over 50% commission on their PPI policy can claim PPI under the Plevin rule. This applies to those who knowingly bought PPI but were not told about the commission. Many banks had 67% commission on a policy, enabling lots of individuals to claim PPI under the Plevin rule.
All those wishing to make a PPI claim under Plevin need to do so before the August deadline.
How to Make a PPI Claim
To submit a claim before the deadline, consumers have two ways to do so. They can either do the whole process themselves or use the services of a claims management company. Many companies deal specifically with PPI claims. Given the high number of claims, companies have made great profits from helping people with their complaints. However, with some claims companies charging in excess of 30% on successful claims, the government wanted to make it fairer for consumers.
In July 2018, the government introduced an interim fee cap of 20% + VAT (24% total). The fee cap may be reviewed when the FCA takes over regulation of claims companies in April. The cut has been dramatic for many companies, but those already operating at a low fee were not affected.
Many individuals prefer a claims company to do the work if they don’t have the time or can’t be bothered with the hassle. The process can be lengthy, especially if people no longer have the financial paperwork showing evidence of a mis-sold PPI policy.
With the clock ticking until the FCA PPI claims deadline, the banks will be grateful when they no longer have to refund money. Until then, however, it’s likely that thousands’ more claims will be submitted.