The PPI deadline is now just over seven months away. Over £33 billion has already been paid to consumers, but much money will be refunded before the August deadline. The Financial Conduct Authority (FCA) hopes that the deadline will encourage those who have not yet claimed to do so.
It allows the banks to finally move on from the mis-selling scandal and stop setting aside money to compensate customers. For companies handling these cases, the time is approaching when they will need to decide which market to turn to next. Many companies might start processing new types of claims before the deadline; this will make the transition easier when August arrives.
Financial Conduct Authority Regulations
In April of this year, all PPI claims companies will be authorised and regulated by the FCA. The FCA wants to give customers more power in choosing a value-for-money service, and ensure fees from claims companies are displayed correctly and clearly. At the moment, all claims companies currently operating must register with the FCA to continue working.
As part of a crackdown on rogue and dishonest PPI claims companies, the government introduced an interim fee cap. All PPI claims companies must now charge 20% or less on successful claims. This means higher competition and fewer differences in price.
Customers will need to look at PPI claims company reviews now more than ever to compare companies. With the clock ticking, companies are working hard to generate as much custom as possible. Despite the fee cap, some companies are charging below the maximum amount.
It’s likely that PPI claims companies will still operate at a low level for a few months after the deadline, as some cases will still be with the bank for a resolution. Claims handled by the Financial Ombudsman Service (FOS) can take up to two years to be resolved, so claims companies will need to remain in contact with the FOS and customers to settle these claims.
Which Claims Will Companies Work on Next?
With many claims companies working hard until the deadline, it’s difficult to know which market they will turn to next. With knowledge about the claims process and using software to help handle the claims, it’s likely that many companies will remain in the claims management market.
In recent years, there has been a surge in payday loan claims. This increase was one of the reasons for the recent collapse of Wonga. The payday lender reported a rise in complaints and refunds, causing financial struggles. This is likely to be an area that companies will focus on, as it’s also related to finance.
However, this is not the only area companies might enter into. Flight delays, mis-sold pensions and personal injury could also be large markets for PPI claims companies to join.
The Next PPI?
There are many theories about what could replace PPI. Is there something else that has been widely mis-sold, or is there a service that people are paying for unnecessarily? Experts in various fields have cited GDPR, Help to Buy schemes and mis-sold pensions as other areas where consumers might be entitled to a refund or compensation.
Although it’s unlikely that these schemes have been mis-sold on as large a scale as PPI, it could be an area that claims companies target to discover if people are owed compensation.
However, with stricter FCA regulations, these companies will need to be vigilant with fees and how they generate leads. Any companies wishing to use cold-calling methods must find their customers legally.
As PPI claims companies prepare for the deadline, consumers need to act soon. The clock is ticking until the end of PPI claims. What happens next is uncertain — for now.