Think that we’ve heard the last of PPI? Not so fast. Payment protection insurance was the policy mis-sold to millions of consumers across the country. Most people have already been compensated for PPI claims, but others have been rejected. It’s these rejected consumers that may have the last laugh after all: a new scandal is brewing, but not with PPI itself. It’s the commission packages that were assigned to these PPI cases that may have turned a “fairly sold” policy into one that was mis-sold.
The key lies in a Supreme Court case that determined a woman’s PPI premium was invalid because she wasn’t told the level of commission involved, or who the commission was earmarked for. This is a breach of the 1974 Consumer Credit Act, according to the court ruling.
It’s a game changer when you think of the cascade effect it’ll have on the industry. For people that weren’t compensated before, there’s a potential 33 billion pounds at stake. This figure was calculated by Autonomous Research, a research firm run by Lord Myners. Myners is a former City minister with a focus on improving consumer interactions.
Keep in mind that this isn’t about the PPI itself being mis-sold, but the high number of commission that were carried along with the package. Bank customers that didn’t get anything before could get something now. The top banks may all be affected by this, which can definitely create a bottleneck in the market.
Banks are still processing PPI claims and dealing with complaints from it, something that takes away from daily operations. They’re not too happy about possibly having to shell out even more money in addition to what they’ve already spent trying to make things right. The Financial Ombudsman’s office is also commenting, especially as they’re still processing PPI problems themselves. This additional scandal will affect the time it takes for people to get their problems addressed.
The Financial Conduct Authority now has the ball in play, but a decision won’t come for a long time as an investigation is still underway. It will be interesting to see if all of the PPI companies step in to help people get the money they deserve, or if they will sit on the sidelines.