As discussed in a previous blog (3 May 2017), consumers seeking compensation in relation to any new payment protection insurance (“PPI“) complaint will now have until 29 August 2019 to complain to the Financial Ombudsman Service about any alleged mis-selling by lenders.
The Financial Conduct Authority (“FCA“) has announced the final deadline in an attempt to draw a line under claims of PPI misselling, claims that have plagued lenders over the last decade. PPI has turned out to be one of the most expensive issues ever to have hit the UK’s financial sector. Based on FCA figures, since January 2011, a total of £27 billion has been paid out to customers.
Inevitably, lenders will welcome the new deadline which should survive any legal challenges by claims management companies. But before the corner is turned, lenders might need to galvanise themselves for a potential spike in new PPI complaints and claims from customers (directly and through those claims management companies) over the next two years. This month the FCA will launch its two-year consumer communications campaign with Andrew Bailey, Chief Executive of the FCA saying that “putting in place a deadline and campaign will mean people who were potentially mis-sold PPI will be prompted to take action rather than put it off“. Mr Bailey may very well be right and certainly the CMCs have not wasted any time in upping their adversting ante.
To cope with any increase in claims, lenders may also need to ensure they have set aside enough funds to deal with any surge of claims over the next two years. Having already set aside £40 billion to cover claims to date, some lenders may do well to re-evaluate their existing PPI reserve pots.
This is very much the end is in sight. But not quite yet.