The deadline for claiming PPI has finally arrived and for consumers, the chance to claim an average of £2,000 in compensation from UK banks is slipping away.
However, many households will be breathing a sigh of relief at the end of unwanted phone calls, emails and text messages – and also the regular radio and TV ads trying to help people claim PPI compensation.
I’m really going to miss this condescending twat telling me he can’t believe that I haven’t claimed my #PPI yet.
— Andrew Hegarty (@andyheg) August 29, 2019
The PPI scandal emerged in 2011 after discovering that UK banks had up-sold Payment Protection Insurance (PPI), usually with mortgage products, and UK consumers had been charged a whooping value of £36bn. Realising that policies were void, banks agreed to compensate any mis-sold claims, with the average claim around £2,000 and Money Saving Expert even finding a case worth £22,000.
Rather than the banks colluding (which in hindsight would have made things smoother), individuals were encouraged to proactively claim back the money themselves, with many having no clue as to whether they purchased PPI at all.
The number of Claims Management Companies (CMCs) emerged almost overnight, using aggressive sales tactics and charging people up to 25% commission to help them recover their PPI claims (although customers can do this for free).
So common were the unsolicited phone calls and text messages, they have been used in popular culture including mentions in Love Island and School of Rock The Musical (the main character is woken up to an unwanted PPI phone call).
But as Streisand once said “Enough is Enough” – and the FCA decided that they were putting a deadline in place to put an end to the madness – and this included some pretty nifty advertising using Arnold Schwarzenegger.
Websites are crashing
A number of websites that offer PPI claim services have been crashing in the last 24 hours as people are literally using the last minute to claim. And out of the £36 billion, there is still billions left unclaimed and the opportunity will soon vanish.
What compensation claims will be next?
With hundreds (and maybe more) claimants working round the clock to push PPI claims, they will no doubt turn their efforts into other compensation products.
The CMCs have quickly turned their attention to mis-sold payday loan claims, with Wonga.com going into administration following over £400 million worth of compensation claims paid out.
The average claim is worth around £800 per customer, but any compensation enquiry also commands a £500 fee from the lender towards the Financial Ombudsman Service, highlighting just how costly this is for payday lenders.
The payday loans industry which was once worth £2 billion in the UK, is now worth around £228 million, and the value of outstanding compensation claims is not far off.
Accident at work?
A very popular compensation claim industry, helping you claim back against an injury, fall or grievance at work.
Been in a car crash?
Still very popular on the cold calling list, if you have vaguely made an insurance claim or been in a car accident, you can expect some unsolicited phone calls trying to help you claim compensation.
Do you have a lot of outstanding debts? You can go into ‘debt management’ and have all your loans and credit card bills put under roof and the company will help you pay them, even if it means paying one of your lenders £2 per month for the next 25 years. This is a fast growing industry and we may see more advertising in this space.