FCA PPI deadline – Will consumers be fully compensated?
As we approach the 6 month point in the Financial Conduct Authority [FCA] 2 year Payment Protection Insurance [PPI] deadline, it is useful to look back to see if the FCA campaign featuring Arnie Schwarzenegger has made any difference to consumer PPI claims behaviour.
Press releases by the FCA and subsequent newspaper articles at the back end of last year suggested that over 1.2 million ‘hits’ had been recorded on the FCA site since the PPI deadline was announced. The articles rejoiced in the fact that more than £27bn had been paid back to consumers. Although a £27bn payback sounded positive in reality it just highlights the failure of the campaign and the absurdity of the deadline.
Only £13.5bn in premiums was paid back!
Firstly, the paid back amount of £27bn isn’t just refunded premiums – that figure includes account and statutory interest. Account and statutory interest typically account for 50% of any pay-out; only £13.5bn in actual premiums had been repaid.
Secondly, it is generally accepted that if all consumers who it is likely were mis-sold PPI do actually claim the amount that should be paid back will total £100bn. So, in fact, less than a third of what is due to be paid back to consumers has been repaid.
Visually the current situation looks like this:
Although numbers often do not often adequately highlight a given situation the above ‘pie chart’ clearly shows the FCA needs to do more to make sure consumers do not lose out!
FCA “PPI deadline awareness” campaign a failure
The pay-out ‘flight path’ also highlights the failure of the Arnie campaign, even allowing for a payment ‘overhang’ after the deadline for new claims expires.
Maybe, it is not surprising that some commentators are already calling for the deadline to be extended!