Payment protection insurance (PPI) misselling compensation “is threatening to become the largest compensation bill to be paid by any section of the UK’s financial services industry”, notes the BBC. To date, around £13bn has been set aside to cover the cost of claims for these policies, which were typically sold alongside loans and mortgages and offered a payout in the event of illness or redundancy.
The banks have decided enough is enough and, via their industry body the British Banking Association, they have asked the Financial Services Authority (FSA) to put a deadline of April 2014 on all further claims. Not only is this downright cheeky, but it has implications for anyone who has yet to make a claim.
Fortunately, the FSA has not yet agreed to a proposal that looks like little more than an attempt by the banks to cap their exposure to their own misconduct and reduce the amount of energy and money they are having to direct to dealing with claims.
It’s easy to see why they want to try – the Financial Ombudsman Service (FOS) that deals with complaints that the banks can’t resolve themselves said recently that it would need to recruit another 1,000 staff to process a further 245,000 expected claims from unhappy bank customers.
Alarmingly, the banks’ suggested deadline has not been thrown out of court. “We have had initial discussions and are prepared to consider the merits of this and other options,” says the FSA.
So what should you do if you are considering making a claim? The obvious piece of advice is to get your PPI claim in sooner rather than later. Some estimates put the number of people who could be entitled to compensation on top of the 4.5 million who have already claimed at two to three million.
But don’t hand over the job to one of the many PPI claims firms that have taken to bombarding pretty much anyone they can by email or phone with offers to pursue a claim. It sounds tempting to outsource the paperwork, but you will be saying goodbye to around 25% of the amount you are entitled to by way of a fee.
That’s silly when the process isn’t very difficult. To get it started you fill in a relatively simple form that may be sent by the bank that sold you the original policy, or you can download it for free from the FOS website, then click on ‘payment protection insurance’). Your first stop is the firm that missold the policy in the first place and if you are unhappy with their response your next stop is the Ombudsman. Good luck!