A deadline for consumers to claim for mis-sold payment protection insurance (PPI) is in doubt after a claims firm launched a legal challenge to the decision (1) by the Financial Conduct Authority (FCA).
We Fight Any Claim, a Wales-based claims management firm that handles PPI cases, saw a 64% boost in its business in 2015 to £27 million, (2) believes there is not enough time for people to claim for PPI – the deadline is August 2019. It also believes there is at least £50 billion more that is owed to consumers (3) over the mis-sold financial product.
PPI was designed to protect consumers — and financial institutions — in cases where people became unable to make repayments on mortgages, loans and credit cards, due to illness, injury or death. But it emerged that many people were unaware they had it attached to their accounts (4) and that they were paying for the privilege. Others felt they were pressured into taking PPI at the time of signing up for a loan or credit card, as it appeared to be a condition for being approved.
Billions of Pounds in PPI Payouts
Since PPI compensation and refunds started being paid out in 2011 by the big banks responsible for the mis-selling scandal, a total of £27.6 billion has been handed over. (5) Many consumers use claims firms to handle their cases, due to their expertise in the area. Those companies are increasingly employing claims software (6) to handle high caseloads and deal with claims as swiftly as possible.
Indeed, the PPI saga has been a bonanza for claims firms, who have enjoyed a collective £5 billion in fees (7) for handling consumer cases in the last few years. Now that the claims deadline is in place – albeit pending a decision by the High Court in legal action amounting to a judicial review – much more could be on the way for consumers and claims firms.
The FCA is not just hoping as many people as possible will make PPI claims in the next two years, before it brings an end to the whole sorry story. It is about to actively remind people all over the country to check if they have been mis-sold PPI and to make a claim if they can — and is reportedly bringing in a Hollywood big-gun to snare everyone’s attention.
PPI Claims, Terminated
Action star Arnold Schwarzenegger is said to be putting his voice to a massive advertising campaign, (8) due to air around the UK later this year, and is getting a hefty paycheck of his own: a cool £1.5 million. He won’t even be coming to the UK to make the ads, as he can record the voice-over in the US and it can be digitally delivered to the ad agencies working on the campaign.
Consumers and the claims industry are now eagerly awaiting the High Court’s ruling on the Welsh firm’s legal move, as the country’s big banks set aside billions more to cover future PPI payouts. (9) For its part, the FCA says introducing a deadline was necessary and would be beneficial to people who might otherwise perpetually delay in making a claim.
“Putting in place a deadline and campaign will mean people who were potentially mis-sold PPI will be prompted to take action rather than put it off. We believe that two years is a reasonable time for consumers to decide whether they wish to make a complaint,” chief executive Andrew Bailey said. (10) “We have carefully considered the feedback we received and we still believe that introducing a deadline for PPI complaints and a communications campaign warning of the deadline will benefit consumers.”