The Financial Conduct Authority (FCA) reported that, to date, £30 billion has been repaid to customers for mis-sold payment protection insurance (PPI).
But, 2019 will eventually see a slow-down in repayments to customers as the PPI deadline brings claims to a close next August. The deadline has been set to draw a line under the mis-selling scandal and encourage consumers to make a claim, rather than keep putting it off.
Alongside the FCA, PPI claims companies are promoting the deadline and urging people to make a claim before it’s too late. They want to aid as many consumers as possible to make a claim.
At the beginning of April, the FCA released its latest advert for the PPI deadline. The campaign to promote the deadline has been paid for by the banks involved in the mis-selling scandal. It features Arnold Schwarzenegger’s robotic head shouting at people to decide about making a claim.
Since the deadline was announced, thousands of people have visited the FCA’s dedicated website to seek more details on how to make a claim. The message about the deadline is reaching consumers’ ears, as the banks are now dealing with an increased number of claims.
The increase in awareness means PPI claims companies are busier than ever. The most reputable PPI companies are handling over 100 claims per day. Many of these companies are small businesses, eager to stand out in the competitive market.
But, in the upcoming months, the PPI claims market will be shifting dramatically as new regulations and a fee cap is introduced.
What is the PPI Claims Company Fee Cap?
The fee cap for PPI claims companies has been a topic of discussion for a number of years. Some claims companies charge 30% + VAT (36% in total) or more on successful PPI claims. The capped price would be significantly lower than this amount. Much like the current letting agent fee cap being discussed in government, the aim of the fee cap is to benefit consumers.
Many consumers are unaware how much they will pay claims companies once VAT has been added after a claim. The terms and conditions often come in small print and people sign without realising how much will be taken. The suggested cap is 20% + VAT (24% in total).
A select few claims companies are already offering their services below this price. But, many are charging much higher fees.
How will the Cap and Deadline Affect Businesses?
For small claims companies battling in the claims market, the fee cap will be damaging. Often, the profits of the business rely on the high fees from successful claims. Only claims companies that are already offering their services for low fees will be able to survive on their current business model. Many claims companies are waiting tentatively for the outcome, which is due in the next couple of months.
Once the fee cap is introduced, small claims companies will need to turn their attention to another business model, or another type of claim. Speculation about whether GDPR is the “new PPI” is being questioned by some.
Whether this will come to fruition is yet to be seen, but until the PPI deadline, both the banks and PPI claims companies will be busy.