Unless you’ve been living under a rock with no access to the British media, you will have heard about the PPI mis-selling scandal. You may have even looked into your own financial history to see if you have been paying for a policy, and you will have almost certainly seen the TV adverts imploring us to make a claim before the newly-set deadline of August 2019.
But what exactly is PPI, and how did the biggest financial scandal of recent years start? Chris McCabe of First Target Recoveries has the answers:
What is PPI?
Payment Protection Insurance (PPI) has been sold alongside credit cards, loans and mortgages since the Nineties. It’s designed to cover your payments should you lose your job or fall ill, and can - on occasion - be a valuable and useful product to some people.
The trouble is, many major high-street banks were selling PPI to customers who didn’t need it, or would never be able to claim. In the worst cases, banks and lenders outright lied to customers by telling them it was compulsory or just added it anyway without consent.
Over the past few years, the mis-selling scandal has fully come to light and thousands of Brits have launched complaints against banks and other financial institutions, claiming back billions of pounds.
The mis-selling of PPI
- Almost 20 years ago, consumer magazine Which? raised the issue of PPI being a poor value, expensive product, but it wasn’t until 2005 that the scandal started to come to light when Citizens Advice launched a “super complaint” into the mis-selling of PPI
- As a result, the Financial Services Authority (FSA) took over the regulation of general insurance sales, and the PPI scandal started to come under the glare of the media. In 2006, the FSA began imposing fines for PPI mis-selling to mortgage companies and banking services, and in 2007, the Office for Fair Trading (OFT) became involved, and quickly referred PPI to the Competition Commission
- 2011 is another significant year in the PPI scandal timeline, as it was the year when the banks finally surrendered and admitted defeat. They confirmed that they would not be appealing against a High Court ruling that meant they had to contact customers to potentially offer compensation for mis-selling. The British Banker's Association (BBA) had previously argued the ruling would force them to apply new standards to past sales that were made before new guidelines were introduced
- That year, Lloyds Bank announced that it had set aside £3.2bn to settle compensation claims, and Barclays confirmed that it has earmarked £1bn for the same cause, proving how significant the scandal was, and how much money was owed to customers nationwide
- Since then, the scandal has gained momentum, and - according to the Financial Conduct Authority (FCA) - a whopping £26.7 billion has been paid out in mis-sold PPI claims to 12 million customers since the start of 2011.
Can I still reclaim PPI?
The deadline for PPI claims has been set for August 29 2019. The Financial Conduct Authority put this in place, after giving in to the banks’ demands to protect their balance sheets and put a stop to the endless compensation claims.
This essentially means that no more new PPI reclaims will be allowed after then. In the meantime, we’re being urged to check if we’re owed PPI compensation and to ensure we get their claims underway well ahead of this deadline.
Is PPI still being sold?
Yes - though with much more stringent rules in place to prevent further mis-selling. Insurance providers must now provide all details of cost and coverage to ensure customers are fully informed, and there are much tighter rules on who these policies can be sold to. With the regulators making frequent checks, no company can afford to break these new rules.
What will happen after the August 2019 deadline?
PPI will continue to exist as a product, and customers will still be able to buy it as part of their loan or credit card package if they so choose, but with the new rules firmly in place to protect both the lenders and customers.
As per the deadline rules, no claims can be made on existing PPI policies created before August 29 2019. However, the deadline conditions do not apply to policies sold after this date, so customers will still be able to make a complaint on a new policy if they have reason to believe it was mis-sold in any way.”
How do I make a PPI claim?
- Submitting a claim is easy and takes just a few minutes, so you don't need to pay a claims management company to do it for you. You don’t even have to have the required documentation
- If you’re not sure you had PPI, check your statements, look on your credit report or ask your bank or lender to check for you. Even if you’ve had a claim rejected before, try again. A new Supreme Court ruling called Plevin means you could be due compensation, all because of the high levels of commission lenders made from PPI
- If you do want to use a claims management company, First Target Recoveries (0800 023 4953) has a handy postcode tracker, so you can find out how much PPI has been claimed so far in your area, and the average payout. The national average claim is £2,000.