Banks ask for PPI claim deadline

Rebecca Rutt
by Lovemoney Staff Rebecca Rutt on 21 January 2013  |  Comments 5 comments

A deadline for making claims for mis-sold payment protection insurance has been proposed by the banks.

Banks ask for PPI claim deadline

UK banks have asked the financial regulator for a deadline of April 2014 to be set for people claiming compensation for mis-sold payment protection insurance (PPI).

The British Bankers Association (BBA) has also offered to pay for a widespread advertising campaign to let people know how to claim.

But the Financial Services Authority (FSA) said the deadline will only be agreed to if it is in the interests of consumers.

“A key consideration will be the potential to get compensation to more consumers, more quickly,” it said. It added that no decision would be made without a full public consultation.

PPI compensation

PPI was sold to millions of customers who took out loans in the past. It is an insurance to cover loan repayments, should someone be unable to pay because of illness or if they lost their job for example.

But millions of policies were mis-sold and customers ended up paying for insurance they didn’t ask for or need.

Banks and building societies have set aside more than £13 billion in compensation for people who were mis-sold PPI.

On top of this complaints about PPI have been flooding into the Financial Ombudsman Service (FOS) which is to recruit 1,000 extra staff this year to deal with the influx.

The average individual pay-out stands at £2,750, with the number of claims expected to rise yet again this year.

Therefore, it would be a benefit to banks to set a deadline on claims so they can work out a budget and a cut-off point for paying out.

But many experts fear consumers will lose out as thousands of people have still not claimed and could miss out if they fail to act before a deadline.

The good news is that as the FSA has responded cautiously, and asked for the consultation, it’s unlikely anything would be implemented in such a short time frame. However, the news should act as a motivator for people to act now before it's too late.

How to claim PPI

Claiming back this money is a free and easy process. Claims management companies claiming to do this for you are everywhere at the moment but these generally charge a fee of 25% of the compensation reclaimed.

We have a step-by-step guide on the website showing you how to make a claim for free.

More on insurance:

The only PPI worth buying

The most successful PPI complaints

What's better than PPI?

Payment Protection Insurance payouts pass £7 billion

Customers could wait up to a year for PPI compensation

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Comments (5)

  • PDB11
    Love rating 75
    PDB11 said

    If a deadline on claiming for mis-sold PPI means that I will eventually stop getting unsolicited phone calls from people or robots (I'm not sure which I dislike more) offering to claim for mis-sold PPI that I have never had, then I'm all for it.

    I still remember the conversation I had with a call centre girl from American Express, shortly after I took out my card. She was determined to sell me PPI. I told her I didn't need it, because I paid off the balance every month. She tried to persuade me that in that case I wouldn't pay for PPI, because it was charged as a percentage of monthly balance; and if my balance was zero, the premium would be zero. That was mis-selling, since paying off the balance in full is not the same as having a balance of zero, as she implied, and I told her so. In that case, it was not simply "read the small print" - she actually gave me misleading information to me to try and get me to buy, not about the terms of the contract, but about how they would apply to my situation. Fine, if like me or Crispvs you understand what you're about, but most people unfortunately don't.

    Some years before that, I did buy PPI. I'd just taken out a mortgage to buy my first house, and my job was at risk (loads of job losses when they privatised the electricity industry). So I actually went and got some PPI from London and Edinburgh. Much to my amazement last year - I had long since paid off my mortgage and cancelled the policy - I got a letter saying they had been going over their books, and they found that they had failed to reduce my premium when I made capital repayments to the mortgage. Six hundred pounds of refunded premiums, and nearly five hundred of interest, that I had no idea I was owed. I was well impressed!

    Oh, and @Grobbendonk, fraud is not the same as theft. If the bank tells you "this policy will be to your benefit", and you buy it, and it isn't, they haven't actually stolen anything. You have bought something you didn't need. It's up to you to prove that the bank used undue persuasion to sell it to you.

    On the other hand If they tell you "It is a condition of contract that you also take out this policy", and it isn't, it still isn't theft; but some or all of the contract is certainly voidable. Once again, this is not a "read the small print" matter. The bank have to tell you the terms - that's what small print is for! - but saying something to your face is part of this. If they say something is a condition of the contract, and then give you a contract to sign where it is not a condition, they are liable. But it's still not theft.

    Report on 22 January 2013  |  Love thisLove  1 love
  • Steviebaby1959
    Love rating 34
    Steviebaby1959 said

    Yes, well said PDB11, If a deadline on claiming for mis-sold PPI means that all of us will now stop getting unsolicited phone calls, e-mails, text messages, etc, from all and sundry at all times of the day and night, weekends, especially, offering their highly expensive services for something that we can all do for ourselves, that's been going on for over 3 years, then I'm all for it as well, bring it on.....

    Report on 22 January 2013  |  Love thisLove  0 loves

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