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Should Consumers consider Lewis and Lloyd’s PPI Deadline ‘rumours’ carefully?

During the summer break, it was reported that Martin Lewis, MoneySavingExpert.com and Richard Lloyd of Which? had joined forces to write a joint letter to the Financial Conduct Authority [FCA] expressing “serious concern” at media reports that the FCA was considering introducing a time bar on Payment Protection Insurance [PPI] complaints. They did not mince their words. The letter reads that such a move “would be to the detriment of consumers” and would “provide the banks with an underserved resolution to an issue that is entirely of their own making”. Another statement made, “Everyone who’s got or had a loan, credit or store card, catalogue or car finance should check NOW if they were flogged PPI – especially as there are rumours a deadline may be imposed.”

What “media reports” were they referring to?

It is not known what particular “media reports” they were specifically referring to or if they have some information that is not in the public domain yet, but such rumours do crop up from time to time and it is not surprising now as the results of the FCA PPI thematic review has been awaited for some time and is expected any week now.

PPI Claim deadline rumours will continue as pay-outs rise

Rumours of a pending deadline for PPI claims have existed for a long time, in fact, ever since the banks lost the judicial review challenge of the Financial Service Authority [FSA] approach to PPI complaint handling in 2011. The rumours will surely continue while the pay-outs and provisions continue to rise and it appears no let-up is in sight. Let’s not forget the prediction in 2011 was that banks, as a result of losing the judicial review, faced a £4.5bn bill for PPI compensation. The reality, as everyone knows, is that banks have actually paid out £20.5bn (between 2011 and June 2015) and that provisions for future payments continue to increase.

Banks pushing for a cut-off date

The strongest rumours circulated in January 2013, when national newspapers ran a number of stories. For example, on 19 January 2013 The Telegraph stated, “Customers mis-sold payment protection insurance (PPI) may wish to file their claim for compensation as soon as possible after it emerged that banks were pushing for a cut-off date.” The FCA PPI review announcement in early 2015 ensured that new deadline rumours gained further authority, although at the time the FT accurately quoted the FSA position as “Any deadline on claims would have to have significant benefits attached. I’m [Martin Wheatley the ex-FCA Chief Executive] not aware yet that those benefits have been articulate to us [the FCA]”.

RBS are said to be opposed to the idea! Sky News

Martin Lewis and Richard Lloyd base the thrust of their argument against a time bar on the basis that “not one of them [banks] has agreed to proactively contact all of their customers known to have been sold PPI”. Any campaign, to be comprehensive and effective, would also be expensive. Last time this came up, the banks were promising a massive consumer campaign; like the ‘R U Owed’ campaign (which was aimed at people who bought a personal pension between 1988 and 1994). That time the regulator alone allocated £10m (then money) to highlight the issues. Maybe, such a campaign will flush out the missing/hidden billions and spur apathetic consumers into doing something; with the size of the PPI mis-selling problem such amounts will pale into insignificance if there is a real desire to identify people who have not claimed where they have been mis-sold. It should not be forgotten that Sky News reported that it had learned that banks were “In secret talks to revive PPI Deadline” and “some banks, including the taxpayer-backed Royal Bank of Scotland (RBS), are said to oppose the idea of a formal time-barring exercise, which would involve a massive promotional campaign to increase public awareness of the PPI scandal”.

To suggest it is easy to make a PPI claim is naive

Although the message from Lewis and Lloyd might be right in respect of inappropriate calls for a time bar, they are naive to suggest, as they do, that everyone will find it easy to reclaim where they have been mis-sold PPI and that all a consumer has to do is complete one of their downloadable templates – it is not always that easy. They are wrong to claim that all CMC’s have “dirtied the name of PPI reclaiming”. Sure, there are some rogue firms in the CMC industry (as there are in any industry) but the Claims Management Regulator is dealing with these. The fact is there are a number of professional businesses that comply with relevant regulations; they offer a robust and thorough service fighting an already exposed complaint handling process offered by many banks.

Managing poor PPI complaint handling practices

Anyone who reads the FCA final disciplinary notices or has listened to the BBC File on 4 programmes exposing poor complaint handling practices will know that often inappropriate hurdles are put in the way of legitimate complainants. Lower pay-outs (using technical rules), mis-leading the Financial Ombudsman Service [FOS], providing limited information in respect of payment calculations and unfairly rejecting genuine cases are just a few of the common barriers. Professional CMCs may help consumers through the fog created by these tactics. How many consumers with a genuine complaint have been rejected or received an incorrect amount?

Martin Lewis and Richard Lloyd are right

To have rekindled this debate is good news, It is not clear at this stage whether a deadline will or will not be imposed. What is clear, however, a deadline debate is circulating. On that basis, consumers who have not yet claimed should dig out any paper work (even if it is stored somewhere in the loft) and if they feel they were mis-sold PPI they should submit their claim, but let’s make sure consumers have all the information they need to make an informed decision as to whether they can handle the claim themselves.

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