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Britain’s big banks responsible for the enormous mis-selling scandal that is payment protection insurance (PPI) are coming under fire for allegedly attempting to stall or get out of paying for current claims by having “lost” soaring numbers of customers’ case data.
Altogether, £27.1 billion has been paid by the banks to consumers since refunds and compensation started being made in January 2011, and they have set aside billions more to cover future claims. PPI protects banks and consumers when repayments on loans, financing or credit cards cannot be made due to redundancy, illness or injury, but it was largely sold alongside financial products without people’s knowledge.
Now it has emerged that financial firms hit by PPI claims from consumers are reporting rising numbers of “lost” case files. According to the Alliance of Claims Companies (ACC), a whopping 80 per cent of claims to one firm, motor finance firm Black Horse, in April resulted in the company saying it could not find the claimants’ details.
In the same month, banking giant HSBC rejected 42 per cent of PPI claims, citing the same reason, massively up on just 6 per cent in January this year. Barclays’ loss of customer data that led to a rejection of claims was 8 per cent in January and 30 per cent in April, while MBNA was at 7 per cent in the first month of the year but 28 per cent in April.
Lloyds Banking Group was also among those increasingly asserting they couldn’t find their customers’ data to process a claim – up from 5 per cent in January to 19 per cent in February and March and 35 per cent in April. RBS went from 29 per cent in January to 47 per cent in April. The only decline among the big banks was with HBOS, which was down 2 per cent in April, at 36 per cent compared to 38 per cent in January.
Head of the ACC Simon Evans said the banks’ delays in processing PPI claims, or outright rejections because they could not locate their customers’ information, was not acceptable.
“There is no doubt this is just the latest delaying tactic the industry has come up with to try to wriggle out of ending this rip-off for customers,” he said. “When we hear they are unable to locate details or they are ‘lost’, it starts a whole rigmarole where we have to submit more evidence and in some cases people have to go to a bank to do an ID check, even if a customer is there with the relevant bank statements.”
Evans states that because claims firms do not charge upfront fees to take on PPI cases, those that are accepted and filed with the banks are solid claims with the best chance of succeeding. Claims firms don’t stand to make money from weak PPI claims due to this business model, he said.
A spokesperson for the BBA, the representative body for the UK banking sector, said: “Banks are committed to handling PPI complaints efficiently. The easiest way for anyone who suspects they are owed compensation to get it is to talk to their bank.”
The rising lost-data revelations come as the Financial Conduct Authority (FCA) is preparing to launch an all-out advertising campaign to urge people to claim PPI refunds or compensation if they have been mis-sold it. The FCA has imposed a deadline of August 2019 for PPI claims to be made, as a way to end the PPI scandal. That is expected to trigger an avalanche of claims — and firms are utilising such tools as claims management software to quickly get through the heavy workloads.
The FCA’s deadline could, however, be derailed, as one claims company has filed a legal challenge at the High Court, saying the two-year period is not enough and benefits the banks. The FCA says two years is ample time to make PPI claims and that the cut-off period is necessary to prompt people into making one instead of putting it off.