Barclays- The Global Reach of UK Mis-sold PPI

Posted: 21st June 2017 & filed under PPI

Barclays- The Global Reach of UK Mis-sold PPI

It’s recently been reported that Barclays is facing a court case in excess of £1bn for the mis-selling of PPI (Payment Protection Insurance) policies. The alleged claim has been made by a British subsidiary of a US company, which had acquired the business from Barclays 10 years ago.

The law suit has seen PPI’s global reach, with PPI mis-selling makings it’s way to the US.

The alleged lawsuit adds to the anguish of bank provisioning. Nevertheless, those who have been following PPI developments will already be aware that PPI - even on standard superficial analysis - has cost UK banks dearly.

For starters, the recent Financial Conduct Authority data, taken at the end of February 2017, shows that £26.7bn of redress has been paid to the victims from some of the major banks in the UK.

Though it’s been showed that around half of the figure relates to repaid interest, it means that an approximate of £13bn PPI premium has been refunded. But, research also shows that the financial regulator is completely clueless of how much PPI was exactly sold.

However, some analysts believe that the rough figure is £60bn, which suggests that less than a quarter of individuals who may have been mis-sold PPI have bothered to consider whether they have it or not. Worryingly, 75% of people who haven’t yet considered their position could perhaps lose out on the refund if the FCA time proposal continues without any “checks and balances”.

Clearly, different banks have different PPI inheritance issues as proved by the loss provisions assigned by several banks over the past few years. But, as per the FCA complaint data, Barclays has around 160,650 open complaints related to PPI. Putting this into context, Barclays PPI complaints represent 140 complaints in every 1,000 live products.

The Financial Ombudsman Service data shows that they have received around 7,044 complaints in regards to Barclays PPI from 1st July 2016 to 31st December 2016, and in the last 6 months they’ve upheld approximately 61% of Barclays PPI complaints in favor of the complaining customers.

There are individuals who had hoped that we were nearing the end of PPI headlines, such as the proposed PPI deadline- this would shut out lawful claims and cause customers a loss if not claimed. However, such headlines show that it’ll only be an unsuitable guillotine that would close the issue-whether it’s fair to customers or not.

How to Beat the PPI Compensation Deadline

Posted: 20th June 2017

How to Beat the PPI Compensation Deadline?

The incoming PPI deadline could see individuals being stopped from being able to claim PPI compensation, which they due. However, there’s still time to beat the upcoming deadline.

When you think of PPI the first thought that’s likely to pop up in your mind is frustrating cold calls, spam emails and of course, exasperating advertising jingles on daytime TV and radio.

By now, you may even think that PPI is over, the compensation windfall has been done to death and all that is left is the Claims Management Company desperately willing to assist people pick up the last bit of meat off the corpse of mis-sold PPI policy and simply take away a chunky slice of any kind of compensation from the entire process.

This cannot be anyh further from the truth. Though the Financial Conduct Authority has placed a time bar on PPI claims, the stopper on claims will be implemented two years later, which ultimately gives you time until 2019.

The banks are aware of this as well- Barclays have just side aside an additional of £400million to repay victims of this mis-selling scandal.

So, exactly what’s PPI mis-selling all about and why is it considered as such a big scandal?

PPI basically stands for payment protection insurance. If you’ve got a PPI covered loan and you’re unable to make the necessary repayments, since you’ve lost your job or have met with an accident, then your policy will meet those repayments.

It sounds so good, doesn’t it? But, unfortunately millions of policies have been mis-sold over the past couple of decades, as they made far more for all the financial institutions and banks than what they could make out of payout costs. Put simply, banks and their employees were incentivised to push customer into purchasing PPI policies whether it was appropriate for them or not.

You may as well ask, “Isn’t claiming for PPI refund absurdly complicated?”

If you’re being told that managing your own PPI claim would be simple, then you really need to know that it’s a lie. Most of the banks – the biggest sellers of PPI – provide their own forms for you to fill in so as to make a claim. And, even if they don’t, you could seek assistance from the Financial Ombudsman Service.

When you’ve got the form, the most crucial thing you need to do is go through all of your financial records and take out as much information as possible- this mainly includes account number, statements, repayment details, accrued interest charges- basically everything that has something or the other to do with the loan you had PPI on.

The more information you’re able to provide, the better is your chance of receiving what you’re rightly owed.

Later on, it’s literally the case of sticking with it- answer honestly to all the questions asked by your bank and chase them if they aren’t responding instantly to your request. Also, if they refuse, you can still take up your case to the ombudsman. While it is possible to claim for refund without any external help, the reality is that banks are not that eager themselves to pay you the compensation and are willing to take stalling measures to ensure that the claim drags on for as long as possible. In such scenarios having a Claim Management Company by your side will further strengthen your chances of being successful with the claim.

Final Rules and Guidance for PPI complaints

Posted: 17th June 2017 & filed under PPI

The mis-selling of Payment Protection Insurance (PPI) has been the biggest issue of concern for majority the financial firms in the UK. It has caused a huge drain on resources with firms handling over 18 million PPI complaints and paying out over £25 billion in redress since 2011. 

It has even damaged public trust and confidence in some these banks and financial firms. So it was a relief when the Financial Conduct Authority (FCA) published final rules and guidance on the future conduct of such claims. Mainly, it was important to bring this issue to an orderly conclusion by imposing a two year deadline on consumers within which they should make a claim or they would lose on PPI compensation money owed to them.

Why do you think these new rules and guidance are needed?

The Rules and Guidance on handling the PPI complaints were enforced since December 2010. Consumers have been seeking influence from the FCA asking them for more guidance that might help the consumers understand the potential issue. The firms themselves have expressed hesitation with suspicious practices of some Claim Management Companies (CMCs) in pursuing PPI claims. This has resulted in wastage of valuable resources and time on dealing with poorly evidenced and speculative claims.

In 2014, the Supreme Court handed out a noteworthy judgment in Plevin v Paragon Personal Finance Ltd. The judgment stated that even though there are no requirements for the firms to disclose the commission paid to the lender/intermediary, there could be a tipping point where the commissions paid become so large that the non-disclosure would render the lender’s relationship with the consumer unfair under section 140A of Consumer Credit Act 1974. In Mrs. Plevin’s case, the non-disclosure of commission, which was equated, was found to be beyond the tipping point. Her case was forwarded to the Country Court, which would decide what relief (if any) should be granted. This kind of decision led to fears of inconsistency and uncertainty on how the non-disclosure of commission will be handled by the Country’s Courts.

What do the Final Rules and Guidance tell us?

The Final Rule and Guidance provide us with:

  • A new rule that needs consumers to make PPI complaints within two years deadline or they will lose out on their PPI compensation pay out. This rule will come into picture from August 29, 2017 with a deadline of August 29, 2019.
  • FCA will lead a communication campaign to let the people know about the deadline starting from August 29, 2017. The estimated cost of this communication campaign is £42 million, which the FCA will recover by a fee levied on the 18 firms who have been found responsible for most of the PPI complaints. The first half of the fee will be collected by April 30, 2017.
  • These new rules and guidance on handling the PPI complaints will come into force on August 29, 2017.

How do these Final Rules and Guidance differ from previous proposals?

There are four major points to consider:

  • Originally, FCA looked at the non-disclosure issue solely as a non-disclosure of commission. The final round of consultation concluded that “profit share” agreements should be taken into consideration. Also, the non-disclosure of any profit share sums must be taken into account as well as the non-disclosure of commission, both to identify whether any unfair relationship exists.
  • The FCA knows that there are consumers who previously made PPI complaints, which were rejected by the financial lender but they may now be eligible to make further complaints. An estimate of 1.2 million customers fall into this category. This requires the firm to now identify such customers and write to them explaining the final rules and guidance.
  • The originals rules and guidance of handling the PPI complaints was supposed to come into force from March, 2017. This was postponed to August 29, 2017 in the final rules and guidance, giving the firms some extra time to prepare themselves.

 These final rules and guidance will not be applicable to future PPI complaints once the deadline date is exceeded.

Can your bank ask you to return your PPI compensation?

Posted: 16th June 2017 & filed under PPI

Can your bank ask you to return your PPI compensation?

After the mammoth PPI mis-selling scandal amounted to £25 billion in compensation payouts for mis-sold PPI polcies, the customers slowly started realising that they had been wrongly sold the policy. People who were self employed or came into the category of PPI exclusions, completely lost their money. This led to the affected buyers making claims for a refund of their money from banks and other financial institutions. The banks got an overload of tasks dealing with the mis-sold PPI customers and returning their claims after making proper calculations.

However, due to the huge number of people who were supposed to be dealt with, the banks often paid more money to the customers than their actual compensation amount. On realising, they asked the customers to return the extra amount back to the banks. This has shocked the customers as banks have asked for up to £15,000 of money back, that too in some instances after four good years of paying their compensation.

Honest mistake or a New Bank tactic?

However, it is also a matter of suspicion, as this might be a trick by the banks to claw back some of the money they have paid out to the customers as PPI compensation. As the PPI policy was sold in a secretive and scandalous way, it is difficult to ascertain the exact amount of compensation that the mis-sold buyer is supposed to receive. Hence, there may be a possibility that the banks have been taking advantage of this confusion and asking the money back claiming it to be a calculation error.

Till now, almost 12 million mis-sold buyers have been reported of claiming compensation for mis-sold PPI. The banks, however, often cause delays in payments. They give various reasons (or rather excuses) – be it an overload of claims, lack of workforce, time required for double checking the payments and policies or simply technical errors.

How Such Mistakes Can Affect The Customers Even More

Christine and Christopher Smith, a couple from County Durham, faced a huge issue regarding banks claiming back their compensation. They were mis-sold PPI, whose compensation was received in the year 2012, amounting to £14,739. After four years, their bank sent them a letter saying that they were not entitled to this sum of money, and asked them to return it to the bank. Sadly, they had already invested this sum in their business over the course of four years. This shows how people get affected by this act of banks clawing back the compensation. There has also been a case where a man was asked to repay £3,634 out of the £5,704 worth of compensation received.

It is strange how banks can get accurate in their calculations after years of paying compensation to the buyers, but not at the time when they were repaid their claims. They may also face a number of issues while dealing with millions of claims that the PPI buyers make. They also have a big responsibility of making the appropriate calculations of the amount of compensation a buyer is supposed to get after claiming mis-sold PPI. However, there has always been a debate on whether this practice is genuine or a trick. If it is a genuine issue, we should give a benefit of doubt to the banks and appreciate the commendable efforts they make. Nevertheless, if the banks are trying to trick us by clawing back the refund, they are only adding to the manipulative PPI scandal that engulfed a lot of victims.


Is Goodwill Payment An Ethical Way To Settle PPI Claims?

Posted: 10th June 2017

PPI was originally supposed to be a policy that is to be willingly purchased by a buyer if they want to have a secured and steady source of income in case they lose their work due to unforeseen circumstances and are unable to make repayments towards their loan, mortgage or credit card bills. 

However, the entire essence of the policy vanished once most of the financial institutions and banks in the country started to make it a filthy business, which only led to the fulfilment of the lender’s greed. This happened at the cost of the buyers’ ignorance or innocence. PPI was sold in an unethical way to the customers just so that the lenders could earn more and more commission from the policy. However, as soon as the affected customers came to know about this mis-selling of PPI, they started claiming back their funds from the financial institutions which sold them the policy.

What is a Goodwill Payment?

The financial institutions have a reputation to maintain. It would obviously be a matter of shame for the institution if everyone comes to know about the fact that it mis-sold the policy to the customer for selfish needs. 

Thus, any financial organisation that used fraudulent techniques to sell PPI adopted the policy of “goodwill payment”. This refers to the situation wherein the financial institution is ready to pay the compensation to the affected PPI buyer, but the institution never admits that it did anything wrong. They try to prevent the complaint made by the customer from escalating and going further, and shut the customers’ mouths with money. This is seemingly never the correct way of settling claims of the affected buyers.

Is Accepting A Goodwill Payment A Good Thing For PPI Complainants?

However, this is a case worth pondering upon. Most customers have very little knowledge about the value of their policy and the amount of compensation they are to be paid by the lenders. They will accept any payments if the lender is successful in making them, believe that it is genuine and that they know the complaint will harm the lender’s reputation if it goes further. 

However, there is also the possibility of the complaint being be stuck with the financial organisation if you try and follow the official procedure. Be it an overload of complaints, a huge amount to be remitted as compensation or simply an excuse by the banks, you will always find a delay and inefficiency in your complaint being duly taken care of. There are several chances of you not receiving the full amount of your compensation, or not receiving it at all. So, if you look at goodwill payment from this point of view, it seems a more feasible option than going through the traditional procedure.

There have been many cases in which the lenders pay a lesser amount of money to the customers than the original compensation and waive off the complaint before it goes further. This might sound unreasonable when you hear about it the first time, but it might make sense when you know that following the official procedure may take much longer. The State hasn’t made goodwill payments illegal. In fact, it is useful for people who need the money urgently. Moreover, according to the norms, the amount of goodwill payment also depends on the customer’s discretion. If the customer is not satisfied with the goodwill offered, he can still complain to the Ombudsman.

 Hence, there are two sides of receiving a goodwill payment by the lender, and both are reasonable in their own ways. It is always your call to make a final decision!

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