The financial watchdog has confessed that only one in five potential complaints regarding mis-sold PPI has been made so far, as it set the final deadline of August 2019 for customers to file claims.
The cut-off of 29 August 2019 has aggravated a protest from several consumer groups. But, it’ll be welcome news for the banks that have set aside more than £40bn in order to cover all their compensation payments, as well as other expenses associated with Britain’s largest mis-selling scandal.
The Financial Conduct Authority (FCA) even revealed that they now estimate that around 52m to 64m PPI policies were sold to approximately 30m customers from 1990 to 2010. It’s also uncertain how many of the policies were actually mis-sold. This contrasts with the watchdog’s 2014 estimation of 45m PPI policies, which were worth £44bn in premium.
FCA said that 13million authentic PPI complaints have been made so far and the banks have paid around £26.2bn as compensation to the victims. Till date in excess of 12million customers have received their payouts from April 2011 to November 2015, as per the National Audit Office.
The latest PPI policy figures came out from a freedom of information request that was made by a consultant of a Claims Management Company (CMC). He was the one who said that firms would make a call for judicial reviews of how the watchdog has handled the entire scandal.
He further added that the FCA’s way of handling the scandal is “unlawful, harmful to ten millions of consumers and on the contrary to the FCA’s legislative objective of protecting all the victims. He said that he handled around £16,000 compensation claims related to PPI policies that were sold along with a store-card. His firm has charged 29% of the fee, which includes VAT on any of the compensation awarded to customers.
The founder of a consumer group branded that FCA’s PPI deadline is a mistake. He said that over half of all the cases in the past 12 months where a PPI claim was refused by a bank, but then it was taken to an independent ombudsman, where the denial is overturned.
He further said that until customers can trust banks to deal with their complaints justly in the first place, the move to protect their balance sheets must not happen. This is putting the protection of financial industries ahead of customers. Also, many banks are making it outrageously difficult for individuals to check if they were even mis-sold PPI.
Another expert of a consumer group said that it has been clear for many years that banks must work harder to resolve the PPI claims justly. The present process has been completely inadequate and has driven too many customers to seek assistance of Claims Management Companies.
However, the chief executive of FCA defended its verdict saying, “Putting in place a deadline as well as campaign will only mean that individuals who had been potentially mis-sold PPI would be forcedto take action now instead of putting it off. It is believed that 2 years is a reasonable time period for customers to come to a decision whether they would like to make a complaint or no.”
FCA said that they would be launching a 2 year publicity campaign in the month of August in order to raise the awareness amongst the consumers. The £42m bill will also be paid by the banks involved in the scandal.
As per the watchdog, consumers now have new grounds to make a complaint relating to PPI if they weren’t informed about the commission being paid when they were sold the PPI policy, under the “Plevin Rule”. Customers would receive compensation for any commission that is paid above 50% of the actual PPI value. All the banks should also write to consumers whose claims have been refused and who had paid the commission.
On an average £2,000 is the PPI payout, though some customers got a lot more. The policy was sold along with mortgages, loans and other credit deals, but in most of the cases, clauses mentioned in the insurance meant that people were not able to make a claim and many were not even aware that PPI was added.