PPI Claims Archive
More Time to take PPI Claims to Ombudsman
The Financial Services Authority today given people more time to take their PPI claims to the Financial Ombudsman. Presently, anyone seeking to make a PPI claim has 6 months from the time their clami is dealt with by their bank or provider, to then refer it to the Financial Ombudsman. However, this temporary extension for PPI cases will last until 27th October 2010.
A consumer may only go to the Financial Ombudsman service after receiving a final letter from their bank and not being satisfied with the outcome. Anyone who received this final letter between 28th November 2009 and 28th April 2010.
This comes after consumers have complained about the way providers have been dealing with PPI claims. Banks rejected 60% of claims last year, however of the cases referred to the Ombudsman, 90% were settled in favour of the consumer.
It was recently reported that the PPI claims cases could cost the industry billions as a result of widespread mis-selling of Payment Protection Insurance policies in recent years.
PPI Could Cost £4 Billion Says FSA
The Financial Services Authority, which last week announced further consultation on the PPI claims fiasco and how consumers should be compensated, estimates that the widespead misselling of PPI will end up costing the industry £4 billion.
The cost, it estimates, will be broken down roughly as £3 billion in compensation to consumers who have not yet complained and in the region of £1 billion in comepensation for those who have complained already. The FSA estimations indicate that this will be broken down roughly as follows:
- £430 million cost to insurance brokers.
- The rest to various PPI providers.
- Around £120 million could fall to the Financial Services Compensation Scheme.
- Costs associated with administrative element of handling compensation.
The costs are high, though this is not exactly unexpected given the scale of the problems with the selling of PPI policies. PPI mis-selling has included cases where:
- Consumers have been led to believe that accepting PPI will increase their chances of a successful application for a loan or credit card.
- Consumers have been led to believe that PPI is compulsory.
- Consumers have been sold policies they would never be eligible to claim on.
- Consumers have been sold policies without even realising it.
And that list is far from exhaustive. With this in mind and the growing media coverage surround PPI, it is likely that claims will increase over the coming year as more consumers realise that they may be eligible to reclaim PPI.