Over 2.5m complainants are to have their past claims over Payment Protection Insurance (PPI) re-evaluated by banks and lenders, as the financial regulator questions the latterís handling of customersí grievances.
The Financial Conduct Authority (FCA) said a multitude of claims made from 2012 to 2013 could have been mishandled by lenders, with some borrowers losing out on the full amount of the refund and others being unjustly rebuffed.
PPI was a form of insurance designed to aid borrowers combat piled up debts in the case of an emergency, such as a familyís main breadwinner meeting an untimely death or being hit with an unexpected redundancy. However, it transpired that PPI was being mis-sold on a mass scale since just before the turn of the century, forcing the regulator to strong-arm lenders flogging PPI into reimbursing unwitting policyholders.
Public outcry on the matter was thunderous as underpinned by the 13 million complaints, directed at the mis-selling of PPI, recorded by the financial regulator since 2007. The FCA noted that whilst £16bn of the £22bn designated towards customer recompense has been paid since investigation commenced in 2011, a downwards trend in the number of successful appeals from customers has developed and this provides basis for a comprehensive re-assessment of rejected claims.
The watchdog has been inundated with over 1m complaints from disgruntled consumers over their perceived treatment at the hands of policy sellers, which equates to roughly a quarter of all rejected complaints.
Martin Wheatley, FCA chief executive, said: “Making sure anybody previously mis-sold PPI is treated fairly now, and paid redress where its due, is an important step in rebuilding trust in financial institutions.
“In around two-and-half million complaints this was not necessarily the case so, at our request, firms will be looking at these complaints again.
The FCA assured the public that banks have agreed to go back over the cases in question, and stressed that discrepancies in a process as far-reaching as this are to be expected. The regulator also warned that lenders seeking to skirt around compensatory measures would be handled with suitable severity.
The 16m already paid back to policy holders could well have contributed to the state of economic growth the UK has enjoyed in very recent times, through the enhancement of consumer spending and the combatting of a culture of spiralling energy bills.
The FCA went on to state that 7 in 10 claims have been settled in the customerís interest with customers receiving an average pay-out of £3000.
Although the FCA ruling marks a breakthrough for mistreated PPI policyholders, if the regulator is to be judged on how efficient its supervisory service has been, then surely it cannot be considered faultless for the length of time it has taken for consumersí complaints to be redressed.
Caroline Wayman, top ombudsman at the FCA, has previously defended the regulatorís position, stating: “We’ve been really disappointed at how long it has taken financial businesses and, at times, claims management companies to really adopt the proper approach to these cases,” she says.
“Clearly that really slows things down when there are these volumes. So we’ve obviously had to adapt ourselves and recruited a huge number of people.”
In fairness, the FCA cannot be accused of apathy regarding the PPI scandal, as roughly half of their entire staff have been placed on the case. Moreover their warnings surrounding the general shadiness of claims management firms last month have been upheld, with thousands being closed everywhere due to failure to comply with industry standards.
This situation seems a particularly sticky one, but it appears policyholders are one step closer to being afforded the recompense they so richly deserve.