An attempt to reach agreement to impose a deadline for making mis sold payment protection insurance (PPI) claims has reportedly failed, after agreement could not be reached between the lenders and the consumer groups. Some banks had wanted to place a deadline for making claims in April 2014, but others opposed the move in the belief it would encourage a massive increase in claims and put pressure on the system. The Payment Protection Insurance claims deadline announcement would have coincided with a marketing campaign aimed at advising consumers of their right to claim, and how and when to do so.
No Deal Possible
The British Bankers’ Association, which looks after the commercial players in the banking world, had been holding talks with banks and consumer groups but has now accepted that any form of agreement is not possible thanks to differences of opinion among the various parties involved. The end of negotiations means that there is no likelihood of a downturn in claims, and lenders now face the prospect of many more years of claims from disgruntled customers. The breakdown of talks comes in the face of Lloyds Banking Group having been forced to apologize for mishandling of claims at one of its major call centres.
Only 10% have claimed
The sheer weight of the problem has been highlighted by Natalie Ceeney, the Chief Executive of the Financial Ombudsman Service (FOS), who stated last month that a mere 10% of people who had been paying into PPI policies in the past had so far made claims. She followed by explaining that the FOS is to take on over 1000 staff in the next few months to handle the rising numbers of complaints that are handled by its staff each year. The FOS handles thousands of complaints every day, a large proportion relating to PPI.
Consumer Awareness Increases
One of the reasons for an increase in claims is that consumers have become more aware of their rights to claim back mis sold PPI charges. This is due to ongoing publicity by the media and advertising by PPI claims companies advertising campaigns. Indeed, these companies continue to help many thousands of consumers to get back the money they are owed. The recent ruling by the High Court stating that banks must pay back any mis sold fees also increased exposure, and with over £12bn so far put aside by the collective lenders to cover the cost of repayment it is expected that the figure will rise further.