The PPI mis-selling scandal has plagued the British banks for a decade now. With billions of pounds repaid to customers and millions of people claiming PPI, it’s had a dramatic effect on the profitability — not to mention the reputation — of many banks.
The Financial Conduct Authority (FCA) is attempting to draw a line under the scandal by imposing a deadline for all PPI claims. All customers who wish to make a claim against their banks need to do so by 29th August 2019.
More people than ever are eligible to make a claim because of the Plevin rule. In 2014, a PPI case by Mrs Susan Plevin against Paragon Personal Finance was brought to the court because 71% of her PPI sale was a commission. She won her case, meaning others in a similar position are able to make a claim under the Plevin rule. If over 50% of a PPI sale was the commission, customers can make a claim — even if their previous claim was rejected.
The Plevin rule means that the banks are likely to pay out even more money in the next 18 months, adding yet more pressure onto a situation that has banks on the back foot.
Are PPI Claims Increasing?
Lloyds Banking Group is dealing with approximately 11,000 claims per week. As such, the bank has put another £2.4 billion aside for PPI claims. Lloyds is a prominent offender in the PPI debacle, but many of its peers will also be seeing increases in claims as the deadline approaches.
Since the FCA launched the campaign for the PPI deadline, they’ve reported a significant upturn in engagement to the dedicated PPI website and hotline.
The best claims management companies are receiving hundreds of claims per day, with this figure likely to increase as the cut-off date for making claims edges ever closer. In short: yes, the number of PPI claims being made is on the rise, and is only set to increase further still in the coming months.
How Much Have the Banks Repaid to Customers?
In the last three months of 2017, more than £300 million was repaid to consumers each month by the banks. This brings the total figure repaid (since 2011) to nearly £30 billion. By the time the PPI deadline arrives, this figure is likely to be £40 billion. This is bad news for the banks, although, many of them have seen profits gradually start to increase after the initial wave of payments and fines.
But, this figure doesn’t represent the true amount that the mis-selling scandal has cost the banks. The banks contributed £30 million to the campaign for the PPI deadline, plus FCA fines and the cost of hiring more employees has increased the cost of the scandal even more.
Will There be a PPI Repeat?
The scale of the mis-selling scandal means the banks should have learnt their lesson. But, there are other instances of copycat mis-selling scandals that suggest otherwise.
In 2015, it emerged that the banks were mis-selling packaged banks accounts (PBA). While these were not as widely mis-sold as PPI, thousands of people were sold PBA unwillingly. The banks have put aside millions of pounds to repay customers.
But, with £30 billion already repaid to customers for PPI claims and more money to be paid out in the next year-and-a-half, it’s unlikely that we’ll see another mis-selling scandal on this scale again.
How to Claim PPI
Consumers who believe that they were mis-sold PPI should make a claim as soon as possible — and there are a couple of straightforward ways to do so. You can contact the bank yourself and attempt to navigate your way through a claim individually, or enlist the help of a PPI claims company to ensure professional assistance throughout. But, it’s important to read all the terms and conditions before signing any contract with a claims company. Understand your rights and always look for a no win, no fee service.
Find old paperwork with evidence of PPI and then make your claim to the bank. If you can’t find your paperwork, a claims company or creditor should be able to uncover this for you. A claim can take up to six months, so start now and don’t miss out before the PPI deadline.