The controversial industry of Payment Protection Insurance, otherwise known as PPI, is exactly one year away from being obsolete. With the deadline for making PPI claims approaching on 29th August 2019, companies look to cash in on the claims are facing one last dash to capitalize on a hugely controversial industry.
Originally, millions of UK households were sold PPI when taking out loans, mortgages and car finance. The insurance add-on was designed to help cover your assets in case the customer became sick, injured or terminally ill. However, it soon emerged that the policies did not provide any cover and were commonly upsold as a way to increase commissions for banks, lenders and brokers.
When this mis-selling was brought to the attention of the Government, they made a law to reimburse every person that every purchased PPI and subsequently, UK banks put aside £35 billion to compensate customers.
However, victims were not automatically refunded and instead were encouraged to claim for themselves, sometimes with hundreds or thousands of pounds owed to them. In one case, a family was reimbursed by £22,000 (NIS 102,000). With the average household not realizing that they purchased PPI, a new wave of claims management companies emerged to help broker the deal – even though individuals can do it for free.
But with huge volumes of commission at stake, it has led to a huge industry of cold calling and unsolicited emails and text messages, so bad that it has resulted in around 3,000 complaints per week to the Financial Ombudsman Service. To overcome this, the City regulator the Financial Conduct Authority has introduced a deadline by which all claims must be made and any claims afterwards will not be valid and with billions still available, there is still a lot to be claimed.
But as the dust is starting to fall for PPI claims, the companies that manage claims are now looking for other industries to pursue such as car accidents and payday loans. In the case of the latter, a huge demand has surfaced for individuals looking to claim on high cost loans that were offered to them without sufficient credit or affordability checks.
According to Payday Bad Credit, there are millions of people in the UK that received high cost loans of over 1,000% APR despite poor credit scores, being unemployed or on benefits and they have had to live with the debt for years. Those victims now have a strong case for compensation and this is something that has started to pick up. In fact, earlier this month, payday giant Wonga, a company which had Israeli investors, received a £10 million bailout after having to pay over £200 million in compensation claims. So whilst many will be glad that the PPI claims are coming to an end, we could see the emergence of new claims on the horizon.