Have you sorted your PPI?
Claims companies in London and around the UK are gearing up for another lucrative wave of payment protection insurance (PPI) claims, unless a newly filed legal move ends up derailing the highly anticipated business bonanza.
A claims management company headquartered in the Welsh town of Cwmbran has mounted a legal challenge against a decision by the Financial Conduct Authority (FCA) to wrap up PPI claims within the next two years. We Fight Any Claim says the FCA’s deadline of August 2019 is “clearly unlawful” and does not benefit the public but the big banks responsible for the huge mis-selling scandal.
Since 2011, £26.9bn has been paid out in compensation and refunds by financial institutions, and claims firms handling the cases collectively amassed £5bn in fees. The FCA now wants to wrap up the entire scandal and bring about an end to claims – and it says that with its newly imposed deadline there is still plenty of time to make a claim.
FCA chief Andrew Bailey said: “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.”
Bailey said the FCA had, “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.”
That was not enough for the Welsh claims company, whose recent PPI TV ads starring John Cleese were banned for being too critical of the banks, however.
“Over the last 12 months, we have repeatedly warned FCA that what they planned was not just plain wrong but was clearly unlawful,” the firm’s legal advisor, Mark Davies, said. “We have also provided the FCA with the detailed and closely reasoned opinion of leading counsel, Stephen Knafler QC, as to the fundamental problems with their approach.”
He said that unless the deadline is lifted, “the only winners will be the banks and card providers who sold this toxic product. Millions of ordinary people, many of whom are not even aware they were sold PPI, will lose out.”
The legal action comes in the form of a judicial review of the FCA decision, and is expected to take some time. It may not be decided before the FCA launches a massive advertising campaign later this year. It wants to remind as many people as possible to check if they have been mis-sold PPI and if so to make a claim.
And in order to generate as much public interest in the campaign as possible, Hollywood action star Arnold Schwarzenegger has reportedly been signed up to provide the voiceover for the ads and is being paid a hefty £1.5 million for the work. This is leading to what claims firms, many of them using specialist claims software to get through high levels of claims, are hoping will be another enormous payday for them as a deluge of PPI claims comes pouring in.
PPI was designed to protect bank and card companies, and consumers, from defaults on payments for mortgages, loans and credit cards if people became ill or injured and could not work and make repayments. But it turned out that many people were unaware they had PPI attached to their loans or cards, and that they were paying for it.
Those who have been mis-sold PPI are entitled to make their own claims, but many opt for claims firms’ expertise in dealing with the relevant financial institutions to get them as much as possible in refunds or compensation.
The big UK banks have set aside billions of pounds more to cover future PPI claims.