Payment Protection Insurance, more widely known as PPI, is the biggest mis-selling scandal UK consumers have ever seen. 64 million PPI policies were sold, but many people had them automatically added alongside loans, credit cards and mortgages.
To date, the banks have paid over £32 billion to consumers reclaiming their mis-sold PPI. However, individuals will soon be no longer able to make a claim. To encourage those who have not yet made a claim to do so, the Financial Conduct Authority (FCA) set a deadline. 29th August 2019 is the final date for customers to contact their banks or lenders in regards to mis-sold PPI.
With just ten months until the cutoff date, consumers should act soon if they want to reclaim money for mis-sold PPI. The clock is ticking to reclaim PPI, but those who have previously had a claim rejected could have the opportunity to claim again thanks to the Plevin rule.
The Plevin Rule Means More People Can Reclaim PPI
In 2014, Mrs Plevin made a PPI claim to Paragon Personal Finance. During the case, it was disclosed that when the PPI policy was sold to Mrs Plevin, the lender received 71% of the policy in commission. The court ruled that this was another form of mis-selling, which created a precedent for other cases.
Those who had PPI policies with over 50% commission can now make a claim to their lender. This includes those who wanted to buy PPI and even those who made an unsuccessful claim on the insurance. However, those who have successfully made a complaint cannot do so again based on the level of commission on that policy.
The FCA is currently reviewing the Plevin guidelines. This means that the banks may need to contact those who have previously had claims rejected and inform them that they can claim again. The FCA is currently deciding whether those who paid high commissions in monthly sums (rather than upfront with the policy) are also due a refund, as the banks should have notified the customer on an ongoing basis, not just at the point of sale. An outcome is expected in early 2019.
How Has PPI Affected the Banks?
The banks have paid huge fees to consumers for its wrongdoings. As well as the refunded money to consumers, the banks also contributed to the £42 million advertising campaign by the FCA to promote the deadline.
Lloyds Banking Group is the worst offender for mis-sold PPI, shelling out nearly £20 billion to consumers. Despite this, the bank has remained in profit. The same cannot be said, however, for Barclays. Paying the second largest amount after Lloyds, the bank has taken a large hit repaying PPI. The bank also received negative press, after the chairman claimed that reclaiming PPI has turned the UK into fraudsters. He believes people are making fraudulent claims just to receive money.
Why You Should Reclaim PPI
For many individuals, August 2019 is a long way off. But the deadline will no doubt spring up on people next summer. If the FCA decides that the banks should write to customers and tell them they have another opportunity to claim, this could lead even more people to contact their bank or lender. As such, making a claim sooner is beneficial. If the banks get busier, you will have to wait longer for a result.
The average PPI claim payout is nearly £1,700. This amount of money can have a huge financial impact on households, making taking the time to find out if you are due a refund 100% worthwhile.
Canary Claims is a leading PPI claims company offering a low service fee and excellent customer service to all those who wish to pursue a PPI claim.