With less than two years left for consumers to make PPI claims, the scandal may finally be coming to a close. Over 10 years ago, the highly-profitable payment protection insurance was sold onto products such as mortgages, loans and credit cards.
In an attempt to sell the insurance to more people, banks often encouraged employees to hard sell the insurance. This meant employees did not explain all of the terms and conditions and added PPI onto products as compulsory insurance. In the worst cases, customers were unaware that they even bought it.
After a decade of fines and customers claiming back money, the banks have paid out over £27 billion. The Financial Conduct Authority (FCA) decided that a deadline needed to be put in place to encourage people to make a claim, rather than keep putting it off. 29th August 2019 is that official deadline. All PPI claims should be made before this date.
Are PPI Claims Increasing Because of the PPI Deadline?
Although early signs suggest a rise in the amount of PPI claims being made, it’s too early to know for sure. Official promotion of the deadline began two months ago with, Arnold Schwarzenegger telling customers to “Do it Now!”
May 2017 saw a slight increase in the amount of money paid out by the banks. At that point, the FCA had spoken about a deadline, which could have caused the increase. PPI claims can take up to six months to be resolved, therefore we may not see the results until early next year.
How Many People are Still Due a PPI Refund?
It is believed that there are still hundreds of thousands of consumers who have not made a PPI claim. There are multiple reasons for this high number, but much of it comes down to the fact that many are simply unaware that PPI was mis-sold to them and don’t know that they are due a refund.
While some banks wrote to customers to let them know they are due a refund, many people are still uninformed and don’t know how to make a claim. With the promotion of the PPI deadline, the FCA has set up a helpline to provide information about how people can make a claim.
PPI claims companies are offering a service to take the hassle out of customers making a claim. As well as contacting the bank or provider, they can also find out if PPI was added to the product in the first place (which many people are unaware of). While a fee incurs, many people find using a claims company simpler and more stress-free.
Will the PPI Deadline End the PPI Scandal?
Both the banks and Financial Ombudsman (FOS) are hoping that the PPI deadline will finally bring a close to the scandal. The banks have paid out billions of pounds to compensate customers and the FOS has a huge backlog of PPI complaints to work through.
The advertising campaign will eventually cease and customers will no longer get calls from claims management companies. Hopefully, the banks have learnt their lesson from the PPI scandal. With the money paid for fines, compensation and hiring more staff to deal with the backlash, banks are unlikely to want a repeat.