With the Financial Conduct Authority’s (FCA) much anticipated decision to time-bar PPI claims after August 2019, banks are looking at huge increases in potential claims, but what exactly will that mean for business and how can we continue to improve processes for consumers?
The current lowdown on PPI claims
Since the decision to set a two-year deadline for consumers to receive refunds from banks over mis-sold Payment Protection Insurance, we have seen a surge in new claims.
The total bill for PPI pay-outs is a staggering £26bn since 2011, and banks are already seen to be setting aside hundreds of millions extra to prepare for the last surge in claims leading up to the 2019 deadline.
This, amongst other factors, has caused shares in Britain’s top banks to fall sharply in anticipation of the increase in claims, and has signalled a dip in consumer trust that needs to be addressed by the entire financial service sector.
To put things into perspective, in February this year, the Financial Ombudsman Service published a record 78,000 new PPI cases in the second half of 2016. These are complaints from people that have already applied for compensation from their banks and have been rejected, leading them to report the case to the Ombudsman. This is something that banks and lenders will need to rectify if they are to uphold their reputation and allow for PPI pay-outs to go as smoothly as possible.
So, what does this mean for business?
This is a great opportunity for banks to rebuild trust that has been lost over mis-sold PPI. By providing excellent customer service when handling complaints, banks can begin to restore faith in their status as household names.
Already, we are seeing great improvements, and the FCA, along with banks and other financial providers, have put together a plan to ensure that consumers receive help when applying for PPI refunds. This scheme includes a restructuring of firms’ websites to provide consumers in-depth information about PPI, as well as online tools designed to make the process of checking for past PPI and claiming potential refunds much easier.
Since setting the deadline, the FCA has been working with financial service providers to ensure that they have the resources and systems in place to ensure that all complaints are handled fairly.
What’s next on the cards for PPI reclaims?
The FCA launched their public campaign today, educating consumers on their rights, and urging them to apply for any owed PPI refunds before the set date of 29th August 2019. This campaign will span the two-year period and is designed to help the public in the process of reclaiming PPI payments.
In addition to a public awareness campaign, the FCA will continue to monitor firms on their processes to ensure that the requirements are being upheld.
The FCA campaign is being funded by the 18 banks and providers who received 90% of all PPI complaints. This shows a willingness of firms involved to deliver on their commitments to customer service. The campaign will be supported by a number of customer satisfaction surveys, conducted by the FCA, to ensure that complaints are handled appropriately.
Until 29th August 2019, the FCA and firms will continue to work together to ensure that the PPI reclaim journey is made as simple and fair as possible for customers. Until then, the number of PPI claims will no doubt continue to increase, but firms seem ready for the rush to the deadline and, more importantly, willing to make the necessary changes required to support their customers throughout the entire process.