The PPI claims deadline is now just weeks away with thousands of people still making new claims to beat the cut-off point of August 29th.
UK lenders have already paid out £34.9 billion in compensation for mis-sold PPI and continue to pay an average of £⅓ billion a month. But what will happen to the millions or billions that remain unclaimed when time runs out?
Put up the shutters?
Are the banks just going to put up the shutters and move on to making more profits, knowing they still owe thousands of people millions of pounds which was wrongly taken from them in a scandal that was three decades in the making?
Announcing the claims deadline, the Financial Conduct Authority (FCA) said: “The FCA now considers there is a case for intervening further in PPI and that introducing a deadline and running a communications campaign would:
- Prompt many customers who want to complain, but have not yet done so, into action, resulting in them potentially getting redress sooner and giving some of them the opportunity to pay off costly debt.
- Bring the PPI issue to an orderly conclusion, reducing the uncertainty for firms about long term PPI liabilities and helping rebuild public trust in the retail financial sector.”
Bringing about ‘an orderly conclusion’ to what has become one of the biggest financial scandals in UK history, but it makes no mention of what will happen to the huge amount of money that could still be owed to consumers if it was wrongly taken from them.
The banks know they have mis-sold PPI to their consumers in the past, so is it fair that so many won’t get to find out if they are owed?
What has happened to the FCA’s directive that customers should be treated fairly?
How much is involved?
It’s impossible to put an accurate figure on the amount of money still owed.
But there are a number of clues that it is likely to be many millions if not billions of pounds, using the banks’ own figures.
For example, in its half year figures for 2018 Lloyds Banking Group (LBG) stated: “The Group estimates that it has sold approximately 16 million PPI policies since 2000.
These include policies that were not mis-sold and those that have been successfully claimed upon. Since the commencement of the PPI redress programme in 2011 the Group estimates that it has contacted, settled or provided for approximately 53 per cent of the policies sold since 2000.”
What about the other half – the other 8 million or so? LBG has already paid out more than £19 billion in compensation for mis-sold policies. If only a tenth of the remainder proved to have been mis-sold that would give the potential for well over £1 billion still being owed to clients.
Check all possible agreements
Until the FCA stepped in with a new directive that all possible agreements should be checked for mis-sold PPI, it was common practice across the industry only to investigate an agreement named in a claim and nothing more, even though it was obvious that PPI had been mis-sold to the same client on other items.
A good example of the type of thing that happened was recently highlighted by consumer champion Which? who revealed a 63-year-old lady from County Durham made a successful claim for mis-sold PPI on four policies.
But when she asked her bank to make a final check on all of her accounts they admitted PPI had been attached to 13 rollover loans and paid her an additional £12,784 compensation.
If she hadn’t asked the question she would probably never have received that money.
Then, of course, there are the people who have either forgotten they took out PPI or have no idea it was added without their consent.
PPI has been mis-sold over three decades and many consumers simply cannot remember events which happened up to 30 years ago. Because they retain no paperwork they have nothing to jog their memories and so don’t make a claim.
Others haven’t claimed because they have no idea it was taken out in the first place. Unscrupulous advisors simply added it to the agreement after the deal was done, often by simply ticking a box on the application form.
No-one knows how many times this happened because a consumer won’t complain about something they are totally unaware of.
Since the deadline was announced the banks have increased the amount of money in their PPI compensation pots by many millions of pounds because they are getting massively more complaints than they had budgeted for.
According to their own figures published earlier this year, five top banks expect to get more than a million additional claims before the deadline:
- Barclays 290,000
- LBG 286,000
- RBS 260,000
- HSBC 183,000
- CYBG 39,600
The money has already been set aside to pay for successful claims, but what will happen to that money if the claims don’t materialise? Will it just go back into the coffers and bolster the balance sheets?
If the money has been set aside already, isn’t that an admission that it could rightfully belong to their customers and not them? And what about the other millions that won’t be claimed because time has run out? Do they deserve to keep that as well?
Britain’s finance industry has been investigating PPI mis-selling for more than 10 years now since the first rumblings of discontent in 2007 which must have made them well aware of the level of their mis-appropriation of their clients’ money.
It might not be theirs to hang onto and isn’t it about time that they started to treat their customers fairly as the FCA insists they should and pay out compensation without forcing their customers to make a claim to find out if they are rightfully owed?
Or perhaps it’s time for the FCA to force them to do so.