Posted: 22nd March 2018
& filed under PPI
Payment Protection Insurance (PPI) policy is widely popular for being sold alongside mortgages, credit cards and loans since 1990s. The sole purpose of the policy is to cover payments on loans if a consumer falls ill, faces unemployment or passes away.
However, the PPI policy did gain profits for the banks which was the main reason behind its mis-selling. Millions of PPI policies were mis-sold to people across the country by their banks for the mere reason of gaining profits.
There are many examples of PPI mis-selling, because of which the borrower with PPI is left with a policy that is of no use to them. Especially when they go to make a claim. It was not just the victims of this scandal that suffered the consequences of mis-selling but also the banks and Financial Ombudsman Service (FOS).
Impact Of The PPI Scandal On The British Banks
Since the 17th century, people of the UK have trusted banks for keeping their money safe. In over a century, British Banks have evolved and have successfully established themselves as powerful financial institutions worldwide.
Keeping this in mind, the PPI mis-selling scandal was a complete shock for the people as they were also disappointed to discover their trusted banks had deceived them.
The customers who paid for loans, mortgages, credit cards and overdrafts noticed an additional charge for PPI added to their total credit amount. Banks had been selling the PPI policy to their customers for years without verifying whether the customers are even eligible for the policy or not.
This greedy behaviour of the banks led to the widespread PPI mis-selling which became one of the biggest financial scandals the country has ever seen.
Ever since the PPI mis-selling scandal was uncovered, the British Banks have been paying out money owed for mis-selling PPI policies to their customers. Even after paying out money for the successful PPI claims, the concerning factor for these high street banks is their reputation and the loss of people’s trust in them.
Now, the banks are trying their best to pay out as much money as they can so as to regain their lost reputation and trust of the people across the country.
Should We Expect A Similar Episode In The Future?
Now that banks have broken the trust of people, they are paranoid and believe that there can be a similar situation again in the future. The way in which banks have fooled the people and mis-sold them the PPI policy was an underhanded way to take people’s money. Undoubtedly, the banks were caught and punished by the financial authorities.
Apart from the PPI mis-selling scandal, concern regarding the other financial products being mis-sold is also observed which has further made it difficult for the Banks to regain their reputation and people’s trust in them. Whether or not the Banks learnt their lessons, the Financial Conduct Authority (FCA) will be keeping an eye over them.
Impact of PPI Mis-Selling on the People of UK
For the mere reason of gaining profits, the Banks mis-sold the PPI policy to millions of people who did not require the policy or to people who would be unable to make a claim in future.
The FCA stepped in and decided that sorting out of the PPI policies was one of its priorities in 2005. By the end of the year 2005, the FCA had written to the heads of all British banks about the PPI mis-selling issue. Later in 2006, the FCA began imposing fines for the mis-selling of PPI.
In 2009, the FCA even banned one of the worst types of PPI called the ‘single premium’ which was sold to mortgage buyers and was added to their total loan amount at the start. The PPI mis-selling scandal however escalated in 2008.
As per the FCA’s records, about 53 million PPI policies had been sold out of which the Banks sold 45 million policies (total worth around £44 billion). There is no clarity on how many of these policies were mis-sold but the FCA estimates that around 3 million people were affected by the mis-selling scandal.
Impact Of PPI Scandal On The Financial Ombudsman Service (FOS)
PPI has been an attractive financial product ever since it made a debut. When it is sold to the right people under right circumstances along with right product and with the right level of understanding of costs, benefits and limitations, PPI can be extremely beneficial for both the borrower and the lender.
Nevertheless, PPI is not a simple product nor is it a single product. There are variations to it that includes,
- Single premium (banned by FCA since 2009)
- Credit card
- Regular premium
- Mortgage (MPPI)
Certainly, it is not a kind of product suitable for everyone and various exclusions and conditions dramatically narrowed its suitability. The attractiveness of the product made it easy to sell it to millions of people and many of them did not have a clear idea about the PPI policy being sold to them.
Many people after realising that they were mis-sold the PPI policy decided to file for compensation. The FOS has been receiving millions of complaints regarding PPI ever since it was first established. In FOS’s 1997 annual report, it claimed it has received about 446 complaints related to PPI.
The volume of complaints has been increasingly growing since the year 2005 and it was not until the middle of 2007 that complaints to the FOS rocketed. From 1832 new PPI complaints in 2007, the figure jumped to 10,675 in 2008.
From October 2010, when the judicial review was announced until May 2011 when it was dropped, the FOS was unable to address most of the PPI complaints. This was despite the fact that the flow of incoming complaints slowed due to banks putting a large number of cases on hold.
From April 2011 to March 2012, the FOS had to face over 150,000 new complaints and the figure more than doubled (around 400,000) during the year 2013-14. At its height, the FOS was receiving over 12,000 new PPI complaints a week. This clearly gives you an idea that the PPI complaints majorly dominated all other cases that the FOS received from across the entire spectrum of financial services.
All these factors make PPI the most discussed scandal in the UK; it is high time people start making a claim for their mis-sold PPI policy. It will surely take a lot of time for you to receive the compensation, but the patience can be totally worth it!
Reclaiming Mis-Sold PPI
If you are among the millions of people who were mis-sold the PPI policy by their banks or lenders, it is time for you to stand up for what is rightfully yours. Reclaiming PPI is a tedious process and most people avoid initiating it.
Depending on your case, it might take days, weeks, months or even years to receive the compensation amount. On the other hand, you should be eligible for making a claim in the first place. There are two main factors that can make you eligible for reclaiming PPI payments. They are:
- If the PPI policy was sold to you without your consent or without informing you that it was optional, then you are eligible to make a claim.
- You may have been sold PPI even though your circumstances at the time of taking it meant you would stand no chance of claiming on it later when needed.
Moreover, if one or more than one of the following conditions is applicable to you, then you are rightfully entitled to reclaim the PPI payments. These conditions are:
- If you signed up for a PPI policy (that includes unemployment cover) when you were unemployed, self-employed or retired.
- If you were suffering from a medical condition while taking the PPI policy and it was still sold you with complete knowledge that it could prevent you from working at some point in the future.
- If you were older than the upper age limit for your policy.
- If the terms of your PPI policy were shorter than the terms of your loan and it was not explained to you while taking the PPI policy, you will be left unprotected towards the end of your loan term.
- If your lender or the bank did not explain you the terms and conditions under which you are eligible to make a claim.
- The total cost of adding PPI to the loan amount was not explained to you or the quote you were given for the cost of the loan had PPI added to it without your consent.
- If you were told PPI policy is compulsory.
- If you were asked to get your PPI cover from the same provider as the loan or credit card.
- If you felt you were being pressurised into taking a PPI policy and were unable to say no.
- If you were not explained the procedure of cancelling your PPI policy.
- If you were already insured with a cover that protects your repayments and were not asked about this or were told that you require a separate cover.
- Upon checking the paperwork you find out that you have been paying for PPI cover but do not remember signing up for it then it may be the case that it was added without your consent.
One thing every mis-sold PPI victim should remember is that it is up to the PPI seller to prove that the PPI policy was completely explained to you and that you agreed to pay for it. If they are unable to prove this, there are good chances for you to make a successful claim against them.
How to check if you had PPI
As we already know, PPI policy is sold alongside loans, mortgages and credit cards. Look for references of ‘PPI’ in the original paperwork of your loan or mortgage agreements, more recent credit card statements and under the terms and conditions of each.
Information regarding the PPI policy and its payments are most prominently mentioned under the additional charges next to the repayment information.
Products names to look for
Apart from ‘PPI’ or ‘payment protection insurance’ your original paperwork may also include different names for PPI and similar products, such as:
- Accident, sickness and unemployment insurance
- Account cover
- Credit insurance
- Loan care
- Credit protection
- Loan insurance
- Loan protection
- Loan repayment insurance
- Mortgage payment protection insurance
- Payment cover
- Protection plan
What to do if something in the paperwork doesn’t make sense to you
While checking for PPI on your paperwork, if you come across something or some statement that isn’t clear to you, call or write to your bank/lender of your loan or mortgage for explanation. When you ask them for this information, also enquire whether you had a PPI policy under your name or not.
After the entire PPI mis-selling scandal, banks and lenders are well aware that their customers might contact them to complaint about PPI and are well prepared to provide correct information to their customers. Contacting your banks or lenders to check whether you had PPI will not affect your relationship with them. Also, it will not affect your relationship with your banks and lenders if you move ahead and decide to file a claim.
Ask your provider if you had PPI
If you ever took a loan or had a credit product under your name but cannot find any relevant paperwork or statements, call or write to your bank or lender without hesitation. You can further enquire whether you had PPI or not.
When you call or write to your bank or lender enquiring about PPI, have the following information handy so it is easy for them to look into products under your name.
- Your full name
- Your address at the time you applied for the loan or mortgage
- Details regarding the loan or mortgage (if you know any)
Most importantly, you should know that your banks or lenders wouldn’t charge you for giving you this information. Banks and lenders are well aware about the PPI scandal and are ready to help the customers that contact them.
Customers should receive a response within 40 days of contacting their banks or lenders. If your bank or lender informs you that you had PPI, it is your choice in the end to decide whether to make a claim or not.
If your bank or lender does not provide services that offer to check whether you had PPI, you can ask them to give you a copy of the original paperwork and terms and conditions related to your loan or the mortgage you took.
If your account is in an active state, this might cost you £1.
If the account has been closed or cancelled, you can make use of your provider’s ‘subject to access’ form and this might cost you £10.
This form will provide you with all the information that your banks or lenders have related to you and the financial products that you have taken in the past 6 years.
Once you have received the required paperwork and figured out that you were mis-sold the PPI policy, you can proceed to filing a claim. There are however, two ways in which you can make a claim,
- Make a PPI claim all by yourself
- Make a PPI claim with the help of a Claim Management Company
Making a PPI claim all by yourself
If you choose to make a PPI claim all by yourself, here are the steps that you are required to take when filing your claim.
- Acquire all the original paperwork and details related to your loan or mortgage that states you were mis-sold the PPI policy. Make sure that you have enough copies of the paperwork in case extra copies are required in the future.
- Once the paperwork is established, call your banks/lender or register a complaint by mail. Alternatively, you can even complete a questionnaire by the FOS and send it to your bank/lender. Attach all relevant documents to the letter that prove you were mis-sold the PPI policy and also provide an explanation for the same.
- Banks/lenders have a time period of eight weeks to respond to your complaint letter. If you do not receive a response or decision within eight weeks, forward the complaint to the FOS.
- After the FOS receives your complaint, they will ask you to fill out a questionnaire to decide whether you were mis-sold the PPI policy or not.
- If you receive unsatisfactory results from the FOS, you can still challenge their judgement. Consult an official ombudsman and request a formal decision. Further, you will be entitled to a complete investigation that might take time as they may require more detailed information.
Making PPI claims with the help of Claim Management Companies
Making a successful PPI claim can be a very complex process as there is a lot of money involved. With tedious arguments with your bank/lender and a requirement of investing a lot of time, the entire process of making a claim becomes burdensome for any individual. For this purpose, there are professional claim management companies that help people make a successful claim.
Apart from getting the work done faster, there are several other benefits of setting PPI claims through claim companies. They include,
Claim companies have a team of professionals that are trained to handle the PPI claims and pledge to do their best to help the victims of mis-sold PPI scandal to get their rightful compensation amount.
However, most claim companies are specialised in several sectors such as personal injury claims, PPI claims and many more. Each department has professionals taking care of the customers. Thus, people can relax and get all their queries resolved by these experts.
Knowledge About the System
Making successful PPI Claims is not an easy task.
The entire procedure and the system are very complex to understand and handle. Victims are required to repeatedly contact their bank/lender and prove that they were sold PPI policy wrongly. It becomes all the more difficult for a victim to put forward their case when they do not have the required information or paperwork.
There are chances of your claim being rejected several times before you choose to approach the higher authorities.
Claim companies in such situations are beneficial as their employees are well versed with the system and the course of law that needs to be followed for making a successful claim.
When you handle a PPI claim by yourself, you are unlikely to be familiar with the entire procedure and the new rules and regulations in order to make a successful PPI claim.
On the other hand, claim management companies have expert individuals that have been dealing with claims for over years and making sure that their clients receive the correct compensation amount.
There is no way that these companies would work on a trial and error method and would never take chance when it comes to their customer’s money. Each employee is trained and has a clear idea of steps to take to make sure the claim is successful.
So, even though the claim management companies charge a certain commission for pursuing a claim on your behalf, they assure you that the work will be done and that you will receive what is rightfully yours.
Things to Know Before Approaching a PPI Claim Management Company
As the PPI mis-selling scandal unfolded, millions of people have been claiming for the mis-sold PPI policy. This has surely put the banks/lenders under a lot of strain, which in turn has made the process of claiming a lot slower. Hence, it gave rise to various claim management companies that help people settle their claims.
However, people should remember few things before they approach a PPI claim management company. Some of which are as follows:
- If your complaint is not complex to handle and compensation amount can be easily acquired, then you can go about the PPI claiming process all by yourself, even though it is not completely advisable.
- As banks have lost the case that was filed against them regarding improper handling of claims, there are chances that you may acquire the compensation amount from your bank/lender over a call.
- Even though the claim is made successfully and the work is done comparatively faster, you are supposed to pay charges (which include certain pre-agreed percentage of your compensation amount plus VAT).
- If you are in debt, then may be approaching a claim company is not a wise choice. There are chances that your bank/lender will use the compensation amount to reduce the debt amount. In this situation, you will not receive any cash but will have to pay the claim company instead.
Thus, even though claim management companies are a smarter and a better way for making a successful claim, you still need to be careful while choosing a claim company.
The Free-PPI-Check Process
When you hire a claim company to handle your PPI complaint, there is a particular procedure that they follow. The procedure is different for every claim company but the motto of it remains the same: make a successful PPI claim.
We at iSmart Consumer Service, give you an opportunity to find out whether you have PPI policy or not without charging you for this service since it is important for you as well as us to know on which financial products you were mis-sold the PPI policy.
Having detailed information regarding the finances on which you were mis-sold PPI policy not only increases the speed of the claim process but also cuts down the amount of work your bank/lender has to do from their end.
The process conducted by us includes the following steps:
1: We check whether you had PPI or not
Our team submits a request on your behalf to the concerned bank/lender. The bank/lender then has a time period of 40 days to respond back with detailed information on everything they hold on you.
However, we take additional 10 days to contact you as we conduct a proper check on the paperwork to see whether you had any PPI policy. Once we find out that you had PPI, we contact you immediately.
2: Confirmation of any PPI policies found
After availing our Free PPI Check service, the results will be conveyed to you via phone, text, email or letter. If you have/had a PPI policy under your name, you will be informed about it so that you can further decide whether you were mis-sold the policy or not.
3: What you wish to do next
If you feel that the PPI policy was mis-sold to you by your bank/lender, you can then decide whether you wish to make a claim all by yourself or with our help. If you feel that the PPI policy was not mis-sold to you, you can ask us to end the process. Ultimately, it is your decision on what you want to do with the information that we provide to you.
4: Asking iSmart to handle your claim
If you feel that the PPI policy was mis-sold to you by your bank/lender, you can ask us to handle your claim on your behalf. We do this process by conducting a questionnaire over a call or by sending out a blank questionnaire by post.
Furthermore, we send you paperwork to sign where you will be entering into an agreement with iSmart. If you agree with our terms and conditions and return the signed agreement, we will start your claim process using the details we have or the details you provide us with.
How Far Back Can I Claim PPI?
Millions of people that have old loans and other finance agreements under their name have had PPI attached to it. Some of these old loans go far back to the 90s which has left people wondering, “How Far back can I claim PPI?”
If you look up online or come across any news explaining about PPI reclaim, you will observe that the informer usually states a “six years” time limit for PPI claims. This means that people can reclaim PPI on loans and other finance agreements that go back up to six years. In fact, this is the time limit set by the Financial Ombudsman Service (FOS) whereby the banks and lenders are required to give any PPI claim a complete and a proper investigation.
Things start getting blurry for the loans and finance agreements (having PPI attached to it) that are made prior to this six years time limit. This certainly does not mean that the banks get to get away with this.
We at iSmart Consumer Service have come across and successfully won various cases that go far back in the 90s. Because of this reason, we can certainly tell you what we know and how we have successfully won these claims for our clients, especially when most of you thought it to be impossible to win.
The Supposedly Six Year Time Limit for PPI Claims
To start with, let’s take a look at the six-year time limit for PPI claims imposed by the FOS and what does it actually mean.
The six years is the time period up to which your bank/lender is supposed to keep your records related to all the finance agreements that you entered into with them. It is very obvious for them to keep records as long as your policy is still active.
If the policy was active until six years back but as of today has ended or terminated this is when the six years limit comes into picture. What this actually means is that your bank/lender is required to keep records of your finance agreements up to six years from the date of completion or termination.
Please note that the time limit is not imposed from the time you take out the policy but from the point you stop making payments for it, as most people mistakenly believe it to be.
If the policy is still active (regardless of you taking it out two months ago or 20 years ago), your bank/lender will have the records right from the date you initiated your policy.
When any of our clients approach us with such a case, we explain to them the same thing that we have outlined above. If a situation arises where the bank/lender has misplaced or lost some of the required important documents, we ask them to do an estimate for the missing time period. For us, there has been no problem or issue till date while making a PPI claim that goes beyond the six years time limit.
Where it gets slightly complicated
To be very honest, it is not always as simple as it sounds. Each bank/lender follows a different practice which is where the process of claiming PPI can get slightly complicated.
In other words we mean, some banks/lenders follow the six-year time limit very seriously and dispose any records as soon as the time limit is reached. Alternatively, there are few other banks that hold records of their clients for a much longer time than the imposed time period.
Regardless of the fact whether your bank/lender holds records for six years or not, we still put legitimate claims through and observe whether the bank/lender has the required details for the given client or not. If they do not have the details, we usually ask them to calculate an estimated amount instead.
What about the claims prior to the six years time limit?
Most people that came to us seeking guidance on “How far back PPI claims can go?” are those whose policies go beyond the six years time limit.
While the FOS is unable to make successful claims for these people, we have successfully won many cases for our clients those have claims that go back to the 90s.
Even though the new regulations that most banks and lenders are bound by came into force since 2005, most high-street banks were still subjected to regulatory schemes prior to 2005. As a result we are not faced with any problem while complaining to the FOS against the major banks/lenders existing prior to the year 2005.
Exposing and Exploiting Loopholes
Usually, the banks or the lenders are the ones that exploit loopholes for their advantage. However, our team of experts have turned the tables around and exploited loopholes that are more beneficial for our clients.
If carefully observed, some of the banks/lenders were not regulated prior to 2005. This means that we cannot complaint against them directly to the FOS. What we can do instead is, exploit a loophole. In simpler words, even though the bank/lender was not regulated at the time, the underwriter of the insurance policy would have been regulated.
During the initial period of making PPI claims, the underwriters used to refuse any type of involvement in the mis-selling when we approached them for PPI refunds. All they said was, they had nothing to do with the lender and thus they refused to pay any compensation.
So, we started using different approaches. We started a process of carefully collecting records of such cases and have now gained enough expertise to not let the underwriters play the card of refusal.
It Is the Duty of the Underwriter to Ensure Fair Sales
When taking a loan or other finance agreement, you either take help from a broker or a lender. No matter which way you decide to go, our team believes that it is the responsibility of the underwriter to ensure that the PPI policy sold to you alongside the finance agreement is suitable for you or not.
On the basis of this belief, we simply forward the cases involving mis-sold PPI policies (prior to the year 2005) to the underwriter. This is done keeping in mind that it was their sole responsibility to ensure their products were being sold correctly and in line with their regulations.
If they fail to do so, we believe that they should be held responsible of the mis-selling of PPI policy to the customers.
However, the actual scenario is a little different, as the underwriters do not easily hand over the money. It is the responsibility of the claimant or the claim management company to prove an association between the seller of the PPI policy and the underwriter.
During the initial stages of claiming mis-sold PPI, most underwriters refused to give away compensation to their customers. Hence, we collected records of such cases at the FOS against the underwriters. In the end, the underwriters were/are left with no choice but to accept their mistake and compensate the affected customers with the rightful amount they deserve.
The only time this approach won’t work is when we cannot prove an association between the lender and the underwriter. This is usually the case where an independent broker sold the PPI policy to the client prior to 2005.
Here, the independent broker does not have any association with the underwriter and so the underwriter cannot be held liable. Moreover, the independent brokers are also exempted, as they were unregulated during that time.
How Far Back Can You Claim PPI?
As you now know, you cannot have a single answer for this question. Most people believe they can only claim the PPI policies that are less than six years old. However, this is not the case.
A mis-sold PPI policy that goes far beyond the six-year time limit can also be claimed if the claimant can successfully prove an association between the broker/lender and the underwriter.
The only time when we were unable to prove an association between the broker/lender and the underwriter is when the broker is an independent broker and the PPI policy was sold prior to the year 2005.
Other important points to note down when investigating how far back you can claim mis-sold PPI is that the six year time limit comes into effect only when your finance agreement has naturally ended or was terminated.
If your finance agreement has an active status, start claiming for mis-sold PPI today!
On the other hand, if your finance agreements initiated 20 years back, but you stopped paying for it anytime in the last six years, you can still make a successful claim.
By going through this, we believe you have got the answer to your question of ‘how far back can you claim for mis-sold PPI?’
Claiming Mis-Sold PPI Without Paperwork
Claiming mis-sold PPI especially when you do not have certain essential paperwork or have forgotten your account numbers used to be a challenging task previously. Until recently, it was nearly impossible to get mis-sold PPI compensation for those without the necessary paperwork.
This situation has changed and claim management companies can now easily make a successful PPI claim without paperwork and without account numbers.
What will you require?
There are most likely to be two ways to claim mis-sold PPI without paperwork or account numbers.
First option is probably the simplest one. All we require is your full name and your previous address history. Along with this information we would require the name of the bank you believe mis-sold PPI to you.
Once we get the information about the bank you feel might have mis-sold PPI to you, we take your full name and your previous address history and run it through their entire database. By doing so, we get information regarding each and every type of loan, credit card, mortgage or any other finance agreement you have had with the bank. Moreover, the detailed information will show us which of those agreements has/had PPI attached to it.
Additionally, while your banks/lenders go through their entire database to retrieve your full credit history, they even search through their sister companies’ databases. Remember that not all companies will search through the databases of every other sister company that falls under the same umbrella.
Who is eligible to use this service?
All the people that believe they were mis-sold the PPI policy by their bank/lender is eligible to make complete use of this service.
This process is however simpler for people claiming for mis-sold PPI via claim management companies.
For people claiming mis-sold PPI policy all by themselves are still required to provide their account numbers for each policy they wish to claim on. The method of claiming mis-sold PPI without account numbers is not available for people claiming PPI policy all by themselves.
Can you claim for mis-sold PPI without paperwork by yourself?
Yes, you can. However, you cannot just submit your name and previous address history like claim companies do. Here, you are required to run a credit check on yourself.
Nevertheless, it is a lengthier process, but it is the only option that is made available to you since you have chosen to claim PPI by yourself. To make the process simpler and faster, the only way is to make use of a claim management company that has this service in place.
Putting An End To The PPI Scandal
The PPI mis-selling scandal has been dominating the financial authorities of the country for over a decade now. To put an end to the country’s biggest financial scandal, the FCA has set a final deadline to make all the claims.
In March 2017, the FCA declared a deadline of August 29, 2019 for all the people seeking compensation over the mis-sold PPI. Even though millions of people have already received their compensation amount, the FCA believes that there are many others who may not have claimed PPI yet. Imposition of deadline will urge these people to move out and make a claim. Moreover, the banks have set aside another £40 billion to cover the payouts.
The FCA also decided to run a two-year public awareness campaign (which has started from October 2017). This awareness campaign is said to constantly remind people about the deadline and urge them to make a claim.
Initially when the deadline was announced, the FCA had to deal with a sudden surge in the number of complaints from the UK citizens. Nevertheless, it also led to a fresh wave of texts and recorded calls by the claimants.
Consumer groups believe the process is entirely inadequate
Andrew Bailey, the Chief Executive of the FCA in one of his interview said, “Putting a deadline in place and a campaign increasing the awareness of mis-sold PPI among the people will eventually urge the people to take actions rather than put it off.”
The FCA believes that two years is a reasonable time period for people to decide whether they wish to reclaim mis-sold PPI or not.
On the other hand, the five biggest banks that mis-sold PPI to its customers – Lloyds, Barclays, RBS, HSBC and Santander – are said to have collectively set aside an amount of £35 billion to cover the payouts.
There have been a few consumer groups that have criticised the FCA for imposing a deadline on making claims. They argue on the fact that it is the responsibility of the banks/lenders to proactively find and pay back the customers that were mis-sold the PPI policy.
They further claim that the entire process of claiming PPI policy is inadequate because of which it has driven people to seek help from claim management companies. Now that the FCA has imposed a deadline on the PPI claims, they should also make sure that the banks are putting in all their efforts to help the affected people get their money back.
There are also some financial experts who claim that imposition of deadline is a complete mistake. They believe that it is being done merely to protect the financial institutions and that the FCA is putting the protection of the financial industry ahead of the customers.
The Financial Ombudsman comes into picture only when claimants are unsatisfied with the compensation amount or have got their claims rejected by their banks/lenders. In other words, the FOS deals with the claims that financial institutions are unable to settle themselves.
For over a decade, millions of people have been so unsatisfied with their complaints and have been continuously facing rejection that they have consequently gone to the FOS.
A Chance to Claim
Apart from imposing a deadline on the PPI claims, the FCA also confirmed some new ground rules to claim mis-sold PPI. These ground rules were made based on the Supreme Court judgement in November 2014. The new rules are based on the famous Plevin case that further elaborated the definition of mis-selling PPI.
The decision was based on the fact that it was unfair of the company to not tell its clients about receiving a large commission on the sale of PPI. Based on the court’s ruling, the FCA decided that the compensation amount would be calculated if the company has paid more than 50 per cent commission.
People whose claims were rejected will receive an official letter explaining them the new guidelines that are now imposed for making a claim. Based on these new ground rules, people can then decide whether they are eligible to make a PPI claim or not.
Three reminders to make sure you claim PPI before the deadline succeeds
The FCA has given two years time period for all the people to claim their mis-sold PPI. Claims coming in after the deadline exceeds will no longer be entertained. Therefore, it is now the responsibility of the people to act as soon as possible.
We give you three reminders to make sure that you claim PPI before the deadline is imposed:
It is beneficial for you to immediately rectify/remember the missing or long forgotten account numbers. It is especially beneficial for people whose finance agreements are between 10 to 20 years old.
Chances for these people to have forgotten their account numbers are high, but there are always some ways in which it can be recalled. If you are among the people who have forgotten their account numbers, you can conduct a personal credit check or conduct a data access request from your bank/lender.
Fill Out Your Information Correctly
Once you are done performing a personal credit check or a DAR, fill out the most essential details of your complaint effectively. Banks/lenders require your account numbers and other personal details to make sure you had PPI under your name mis-sold to you by them.
Claims Management Representatives
Having a claim management company handle your claim on your behalf might not be your obvious choice. But these are the professionals that are ready to invest the time that is required to make a PPI claim while you can relax and continue with your daily routine.
One of the major advantages of having a claim company work for you is that most of them work under a ‘no win no fee’ basis. This means, if you have been mis-sold PPI under your name, you pay them only when they help you make a successful claim.
Legal Opposition faced by the FCA
In an attempt to impose a final deadline on the PPI claims, the FCA found itself facing some legal challenges.
By now we all know that the FCA has imposed a deadline of August 29, 2019 for people to make their PPI claims. Claims received after the deadline exceeds will no longer be entertained.
Most Claim management companies however seem to be very unhappy regarding the imposition of deadline and had filed a case against FCA, which they eventually lost.
However, the claim companies did not back out and further moved on to appeal against the court decision. They requested for a judicial review against the FCA. The judicial review was filed on August 14, 2017.
The main reason behind the imposition of deadline is that the FCA wanted to put an end to the entire PPI scandal that has been a point of issue for over a decade now. Ever since the deadline was announced, the banks made sure to set aside a collective total of £35 billion for compensation of the PPI claims.
Not only the banks but also the people across the country are eagerly waiting for this issue to end. The FCA first announced in October 2015 that it was imposing a deadline so as to manage the outstanding claims in an orderly manner.
Claim companies were said to be holding their case based on the EU law that states the Financial Ombudsman Service is the authority that is entirely responsible to handle the PPI related disputes. Based on this jurisdiction, the claim companies argued that the FCA has no power to impose any kind of deadline on the PPI claims.
In their defence, the FCA claims that their decision of imposing a deadline on the PPI claims is a right thing to do and will be beneficial for the people and the UK economy. They further stated that they would continue to defend their approach no matter what.
Despite the threat of judicial review thrown at the FCA, they continued with the launch of the costliest ad campaign worth £42 million. The ad campaign is said to increase the awareness regarding the imposed deadline among the people. The promotional campaign has started to air from October 2017 and will continue to air all over the country until the deadline is finally here.
For those of you worrying about taxpayer’s money being spent on an ad campaign, there’s no reason to worry at all. Because funds for the ad campaign have been arranged by those banks and financial institutions that had a big role to play in the PPI mis-selling scandal.
The main purpose of the ad campaign is to make every individual across the country well aware about the two years’ time period to make a successful claim. Due to the awareness raised by the ad campaign and the implementation of deadline, the overall compensation amount for the banks is certainly going to increase.
During the first month of ad campaign, the banks/lenders noticed an enormous increase in the number of complaints for PPI claims. The FCA believes that the number of complaints will keep on increasing as the deadline nears.
The number of complaints are bound to increase mainly because of the new rules and guidelines based on the famous court ruling known as Plevin. Under this new ruling, people whose claims were previously rejected may now be eligible for a payout.
The New Rules and Guidelines
The mis-selling of PPI has been a source of great discomfort for financial firms all over the United Kingdom. It has managed to harm the trust and confidence that people had and has also acted as a massive drain of resources of firms who have been handling more than 18.4 million PPI related complaints.
Since 2011, these firms have been paying out over £26 billion in order to remedy the situation. The FCA, after extensive consultation on the future state of claims being made has published final rules and guidance.
Essentially, it believes that there should be an end to PPI claims and it can only be achieved by imposing a two years deadline on consumers within which they are to make their claims or lose out on assessment by firms or by the Financial Ombudsman Service.
The Need For New Rules and Guidance Explained
The rules and guidance for addressing PPI complaints has been in force since December 2010. Still, consumer bodies have been clamouring the FCA asking for more active steps to be taken to help consumers get a complete understanding of the probable issues.
This was demanded in case they were not satisfied with the way their complaints were handled.
Firms have also stated their concerns regarding the questionable practices of certain Claims Management Companies (CMCs) which have led to precious resources and time being wasted with the handling of claims that were poorly evidenced.
In 2014, the Supreme Court passed a significant judgment in the Plevin v Paragon Personal Finance Ltd case. This then laid emphasis on the fact that even in the absence of regulatory requirement for firms to divulge the commission paid to a lender or intermediary out of a PPI premium, there could come a tilting point where the commission given became so significant that non-disclosure could (taking into consideration all other circumstances) make the lender’s relationship with the consumer inequitable under s.140A of the Consumer Credit Act 1974 (CCA).
The court did not specify where the exact tilting point lay other than ruling that in Mrs. Plevin’s case, non-disclosure of commission that came up to 71.8% of the premium was “beyond the tilting point”.
Her case was then handed over to the County Court for it to decide the nature of relief if any should be awarded. This was to be considered taking into account all the personal circumstances and precise facts of her case.
The decision made harboured fear that there would be ambiguity and discrepancy in the way non-disclosure of commission complaints would be dealt with by the County Courts.
Alongside the backdrop, the FCA consulted on package of measures that were solely designed to improve the way firms dealt with PPI complaints since November 2015.
What Do The Final Rules And Guidance State?
In the light of the final rules and guidance, they make provisions for:
- A novel rule that demands that consumers register PPI complaints within the respective two year deadline or lose their stand to get their situation assessed by firms or the FOS. This rule was first announced on 29 August 2017 and the deadline was proposed to be 29 August 2019.
- To make people aware of this campaign, FCA led communications that informed people of the impending deadline. This began on 29 August 2017 and the estimated cost to make this successful came up to £42.2m which the FCA is believed to recover by a fee charged on the 18 firms that were responsible for generating most number of PPI complaints. The first half of the fee was collected on 30 April 2017.
- In regards to the Supreme Court’s judgment in the Plevin case, new rules and guidance on the handling of PPI complaints were issued and have come into effect since 29 August 2017.
A Brief On The New Rules and Guidance On Plevin
The final rules and guidance state that when a firm is considering a complaint pertaining to a PPI policy that covers a credit agreement under s.140 of the CCA, it should be assumed that failing to reveal a commission and estimated profit share which when added together exceeds more than 50% of the total amount paid for the policy does point towards having an unfair conduct and relationship.
In such a case, the firm should grant redress amounting to:
- The total amount of the commission in addition to the amount that represents the actual value of any payment (s) made in regards to the PPI policy under profit share agreements that were conveyed as a percentage of the premium, minus 50%. So, for instance, if 70% of the premium consists of commission and profit share, the difference between that percentage and 50% would be 20%.
- The significant interest that a customer pays on that particular portion, for instance the interest paid on 20% in the point above.
- Yearly simple interest on the total of the two points above.
The Difference Between Final Rules And Guidance From Past Proposals
There are four notable points that shed light on the differences. These are:
- When the FCA initially assessed the issues of non-disclosure, it mainly looked at non-disclosure of commission. In light of its last round of consultation, it has concluded that ‘profit share’ arrangements should also be taken into consideration.
- Such arrangements generally entitle firms to get back a certain amount of PPI premium money that has already been received by the insurer but is not ultimately used to cover for claims on policies. But, often this is on the comprehensive non-customer specific basis and it varies across different time periods and depends on which insurer was involved.
- Non-disclosure of any expected profit share sums have to be duly considered wherever possible. Also, non-disclosure of commission in terms of recognising whether an unfair relationship is present in respect of any redress that is then due to the customer also has to be taken in account.
- The FCA was aware that there might have been customers who had made PPI complaints in the past that were refused, but might be entitled to make a complaint again in light of the Plevin case. A rough figure of around 1.2m customers was estimated to fall in this category. So, it has become imperative for firms to look for such customers and inform them about being eligible to make a claim again.
- The initial rules and guidance regarding the handling of PPI complaints were expected to commence by the end of March 2017. However, it was shifted to 29th August 2017 in order to give firms more time to prepare themselves.
- FCA has made it clear that the time bar wouldn’t be applicable to complaints that’d be received in the future, which were previously refused on an existing PPI policy, especially if it was refused due to reasons linked to the sale, such as limitations, ineligibility or exclusions.
Changes in the Plevin rule and guidance to involve profit share would simply create complications in the way a claim is being assessed and how the refund is calculated. It would even increase the number of cases wherein an unreasonable relationship is being assumed and where refund has to be paid.
In simpler words, there’s also a possibility for a spike in the marketing activity by the Claims Management Company, which could lead to an increase in the volume of PPI claims.
Firms might have to set aside significant amount of resource to deal with all of this, but would now have 5 months with them to prepare. On the whole, firms would be pleased to see that the FCA is still dedicated to pioneer the two-year time bar and hasn’t extended it further.
Though a consumer campaign might cost them thousands of pounds, an overall drop in the uncertainty regarding PPI liabilities might possibly reduce the firms’ long-term cost of capital. These rules and guidance would assist firms in bringing the PPI issues to an orderly conclusion.
FCA starts the countdown to PPI claim deadline with an Ad Campaign
You must be well aware regarding the FCA’s costliest ad campaign that started in October 2017. The main purpose behind the ad campaign is to promote the deadline imposed on making PPI claims (which is August 29, 2019).
The ad campaign featured Arnold Schwarzenegger and an animatronic model of his head, which was seen urging the people of the UK to make their decisions about claiming PPI before the deadline is here.
The FCA introduced a deadline so that people can make up their mind whether they wish to make a claim or lose their money altogether.
The FCA, after imposing a deadline on making the PPI claims, also designed this ad campaign with a hope that all these efforts will finally put an end to the decade old PPI scandal. Until 29th August 2019, the campaign will continue spreading awareness about the PPI scandal and the procedure to get back what you rightfully deserve.
Andrew Bailey, Chief Executive of the FCA quoted:
“Our ad campaign aim towards cutting the PPI scandal entirely. We want to encourage the people of the UK to make a firm decision whether to find out they had PPI (wrongly sold to them) and whether to complain or not. Our and Arnie’s message to people is ‘Do It Now!’ and I urge people to make a decision before the deadline of August 29, 2019 is finally here.”
Ever since the FCA started handling the PPI complaints, over £27.4 billion has been successfully paid out to the affected victims of the PPI mis-selling scandal. PPI policies were wrongly sold to people across the country on a large scale alongside loans, credit cards, store cards and mortgages between the years 1990 and 2010.
The firms that mis-sold PPI to its customers, which include banks, building societies and credit card providers, have sponsored the ad campaign.
To make the process of making PPI complaints easier for the customers, the firms have moreover agreed upon certain number of steps. These steps include:
- An option for the affected victims to file their complaints online
- Making sure that the complaint forms are as easy and understandable as possible so that people can easily make a claim
- Provide additional support for customers that require special guidance and help while submitting their complaints
- Providing useful and free PPI check services for people’s benefits
The launch of the ad campaign also promoted the start of new ground rules for complaining regarding PPI. This means,
- Affected victims of PPI mis-selling scandal are entitled to make a claim even if they were not mis-sold PPI in reality.
- If an individual previously made a complaint and was rejected the claim, they may be entitled to make a complaint based on the new rules.
Moreover, the FCA has also initiated a new service of dedicated phone line that will be available to assist the people with whatever PPI related queries they may have. The FCA has also updated their official webpage to provide more information to the people so they make an informed decision.
Is the PPI Scandal Finally Coming To an End?
Having less than two years in place for the people of the UK to make their PPI claims, the FCA believes that the scandal will finally come to an end. Since it has been over a decade for the PPI scandal, the people of the UK are desperately waiting for the scandal to end.
Like we already know, the PPI policies were mis-sold on a large scale to people by their banks and the financial lenders. This was in an attempt for the banks and lenders to earn huge profits in return which otherwise wasn’t possible.
In the process of mis-selling the policy, the banks/lenders did not explain the terms and conditions of it to the applicant or in some cases made the policy to be mandatorily purchased alongside the financial products. While in some worst-case scenarios, the policy was sold to the customers without their consent.
It was after years when the FCA finally decided to step in, mis-selling of PPI policy qualified as a legal offence under the rules and guidelines imposed then. Finally, after over a decade of claiming PPI compensation and imposition of various rules and guidelines, the banks/lenders have paid out over £27 billion to the affected people.
This was when the FCA decided to put an end to this scandal by imposing a final deadline rather than continuing to accept applications for more years to come. August 29 2019 is declared to be the final deadline for claiming mis-sold PPI and it is expected from the people to start claiming PPI as soon as possible.
PPI Complaints Increasing Due to the PPI Deadline
Ever since the deadline has been imposed, the FCA office has been flooded with PPI complaints. However, the FCA believes that the numbers of PPI complaints are going to continue increasing, as the deadline gets closer.
The FCA also launched an official promotion of the deadline that began in October 2017 which featured the famous actor Arnold Schwarzenegger prompting people to “Do It Now!”
On the other hand, during the month of May 2017, there was a noticeable increase in the amount of money paid out by the banks/lenders as compensation. This was during the time when the FCA had thrown a small hint about imposing a deadline, which according to us may have caused the increase.
For those of you who don’t know, resolving a PPI claim takes up to six months of time and therefore we may not know the fate of our PPI claim until early 2018. Most importantly, it does not mean that people should avoid making a PPI claim thinking about the amount of time they are required to invest in it.
Claim Management Companies have been readily helping people and providing utmost support and guidance to make a claim. You can contact iSmart Consumer Services today to make a successful PPI claim.
Many People Are Still Due a PPI Refund
According to the FCA, almost 53 million PPI policies were sold to people, which mean that many people are still to come forward with their claims.
It is believed that there are thousands of people who still haven’t made a PPI claim (due to various reasons). There could be a million reasons why so many people have not stepped forward with their claim of compensation. This ultimately comes down to the fact that many people may or may not be aware that the PPI policy was mis-sold to them and that they are due for a refund.
Ever since the FCA decided to handle PPI related conflicts, they ensured from their end that the banks/lenders that mis-sold PPI policy to its clients do something about it. They suggested that the banks/lenders should personally write a letter, text or email the clients to inform them that they are due for a refund.
There have been several banks/lenders that did implement this suggestion and wrote to its customers informing them regarding their due refunds on the mis-sold PPI policy. While this suggestion was just implemented by few banks/lenders, there are many who are still uninformed and unaware about how to make a successful PPI claim.
To overcome the issue, the FCA decided to launch its own ad campaign. This campaign will raise awareness regarding the PPI deadline and as well as encourage people across the country to make a claim before time runs out.
The FCA along with the claim management companies and the banks is prepared to help the affected people by making them understand the new rules and guidelines under which they can file a successful claim. Moreover, the process of making a complaint has also been made simpler for the benefit of the people.
Will the Deadline End the PPI Scandal?
After all this, the only question on most people’s mind is: Will this be the end of the PPI scandal?
All the banks implicated in the scandal and the Financial Ombudsman Service (FOS) are hoping that all the efforts put in by the FCA and the banks themselves finally puts an end to this entire PPI scandal.
The banks have already paid out in billions to the affected people and are preparing themselves to pay out more in the ongoing claims process. On the other hand, the FOS even has a huge backlog of complaints that they still have to work through.
Just like everyone, we are hoping that the banks have learnt their lesson. With the money paid for fines, compensation and hiring more staff to deal with the backlash, banks are unlikely to want a repeat of this entire episode.