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The PPI scandal created a windfall for consumers and seriously dented the reputation of almost every major bank and lender. Consumers were over sold or mis-sold the PPI policy and thousands of consumers paid millions of pounds extra on their loans and credit cards. Banks directly profited from these policies and most of them were ineligible or downright illegally sold to consumers. Consumers who were unlucky enough to require the PPI payments scarily realized that they had paid the premiums but they would not get coverage.
Complaints to the bank did not work and more than a thousand complaints were forwarded to the Financial Ombudsman and finally to the courts. The investigation resulted in a huge expose with several major banks being exposed for the financial mess. The courts eventually ruled in favor of the consumers. The banks were instructed to pay back the funds they had collected from unwary consumers and they also had to call in customers with letters asking them to collect their pending payments. Although the courts have done everything possible for the consumer, a few persistent problems have cropped up.
Consumers confused about the application process to the banks - Although the news about the PPI claims has been extensively carried by the media, financial authorities are dissatisfied. According to the authorities, more than 5 million consumers have to still claim their PPI payments and have not done so. There might be several reasons for this and according to market research; the main reason for the delay has been the application process. Consumers have to tally their financials and they have to apply to the banks with the details of the amount that they are due along with the interest rate. This means that they have to tally the payments that were done on insurance policies, mortgages, personal loans, cars loans, credit cards etc to find out how much they have paid to banks over the years in the form of PPI payments.
After tallying accounts, they also have to find out interest rates and then add it to the total before application. For the mathematically-challenged who do not have paperwork or financial details ranging back ten years, this can be a serious challenge. However, the authorities have decided to simplify the process to ensure that more people can apply quickly. Consumers are also encouraged to get in touch with charitable organizations who will offer free help with the payment accounting.
Using claim management companies – another problem which seems to have cropped up is the use of claims management companies. These companies approach the consumer and do the entire accounting and reclaims process for them. They eventually take about 25% of the amount that they are able to wangle from the banks. The companies have also started cold calling customers to take on additional customers. Apart from cold calling, the companies are also spending about £1.6m advertising their paid claim process.
However, financial authorities have requested consumers to stop using these claims management agencies. According to them, these agencies are not required and consumers can contact the banks directly for their payments. Currently more than 75% of the claims are coming from professional management companies but more than 22% of these claims are from people who have never taken on a PPI policy. More than £1.9bn has been paid out to these consumers but there is still about £4.9bn that can be claimed. Ideally, consumers have to approach the bank themselves and the payment is made within 6 months. If the payment is not made, then the claim has to be sent to the Financial Ombudsman.
Delay at the Financial Ombudsman (FOS) - If the bank rejects the claim, the consumer has to approach the FOS within 5 months. Most of the cases at the Financial Ombudsman are decided in favour of the consumer. However, currently the FOS is swamped with more than 6000 financial PPI complaints. It will easily take more than 18 months to have these complaints resolved and the outcome is variable.
Although these are the most common complaints about the claims process, we heartily recommend that you claim your money right away. Tally your accounts and claim your payments and interest back quickly.