It’s been a busy month for PPI claims companies. At the beginning of April, the Financial Conduct Authority (FCA) began regulating claims management companies. These firms were previously registered and regulated by the Claims Management Regulator. However, the move to the FCA is a way to “boost consumer protection and the professionalism of the sector by driving up standards in the industry.”
In previous years, claims management companies have received negative press due to excessive cold calls, high fees and some companies even scamming consumers out of money. The shift in regulation should encourage a clamp down on these few rogue companies — leaving only the best PPI claims companies to handle cases for consumers.
All claims management companies that wish to continue operating should have applied to the FCA for authorisation. Now, all companies registered by the FCA can be found online.
But is this the best time for a significant change in regulation? The impending PPI deadline and change in authority could cause big ripples for consumers and firms alike.
Wrong Time for the Switch in Claims Company Regulation?
Many customers are still seeking PPI claims companies to handle their claims before the deadline. While the best PPI claims companies are still operating and attempting to process as many claims as possible, there might be a limited choice left for consumers.
The shift in regulation and the impending deadline could cause some claims companies to cease operating altogether. Some firms may not want the extra bureaucracy, while smaller firms may decide to leave the claims market. In turn, this could lead to customers being let down by claims firms and having fewer opportunities to submit their claims before the ever-looming cut-off date.
The Impending PPI Deadline
To date, over £34 billion has been paid to customers for mis-sold PPI policies. But there are now less than five months until the PPI deadline. The FCA chose 29th August 2019 as the final deadline for customers to submit their PPI claims.
Both the banks and PPI claims companies are working hard to process as many claims as possible before this date. 29th August is fast approaching and it’s believed that many individuals are still due PPI refunds. Those who still need to make a claim can do so themselves or use a reputable FCA-authorised PPI claims company.
In July 2018, all PPI claims companies were forced to cap their fees at 20% + VAT (24% total). This opened up greater competition for all companies, as many had to slash their fees by nearly 50%. For consumers, however, this meant they would be able to receive a greater amount of their PPI refund. Some firms were already offering a fee below 20%, meaning the cap had little effect and enabled them to continue to thrive against others in this increasingly competitive industry.
After the PPI Deadline
It’s likely that some companies will stop taking PPI cases before the deadline. Some might start to process claims for other types of mis-selling, such as mortgages or packaged bank accounts, while others may change industry altogether.
Many PPI cases may be resolved at the bank after the deadline date. The Financial Ombudsman Service is still facing a huge backlog of claims. All claims companies handling these will need to keep customers up to date with the progress of their case, even after the deadline.
It’s difficult to say how many PPI claims companies will remain in a few months. Hopefully, consumers will still have a healthy choice when it comes to finding an honest company to process their claims.