How PPI claims companies in the UK can help you fight the banks

by Legal Author on September 4, 2012

PPI Claims Uk money

The following is a guest post outlining the benefits of PPI claims companies and how they can help you fight UK banks for mis-sold PPI money you are entitled to recover.

Payment protection insurance (‘PPI’) claims companies in the UK may have been subject to some abuse in the past few years, not least because of the excessive spends on TV and radio advertising and, unfortunately from some rogue companies, SMS and email spam marketing. Nevertheless these UK PPI claims companies such as PPR exist to help people claim back money that is rightfully theirs. And in a recent article, journalist Paul Farrow, Personal Finance Editor at The Telegraph, has come to the defence of PPI claims companies. There are indeed various ways in which PPI claims companies can help their clients ‘get results’.

How much money have UK banks put aside for PPI claims and what is the legal position?

First, it’s important not to forget just how much money has been put aside by UK banks to cover PPI compensation: the largest banks have now put aside £8.8 billion to cover PPI compensation! With the cost to banks approaching £10 billion, PPI mis-selling is set to become the costliest financial scandal in British financial history.

In legal terms, the floodgates were opened last year in May 2011 when the British Bankers’ Association (BBA) declared it would not appeal against its failed judicial review challenge against the new rules of the Financial Services Authority (FSA) regarding PPI mis-selling. The High Court had previously ruled that banks had to obey the new FSA rules, requiring them to review all of their past sales to check if their customers had a claim for PPI mis-selling.

At the same time, the banks were already setting aside large amounts to pay compensation: Barclays: £1bn, HSBC: £269m, RBS: over £1bn, Lloyds: £3.2bn. These figures have increased substantially since then to reach almost £10bn in total.

How many PPI complaints are being made in the UK?

Because of this amount of money being put aside for PPI claims, it’s not surprising that the number of PPI complaints being made to banks each year has been rising. As the BBC reports, general bank complaints at Barclays in the first half of 2012 were up by 76% on the same period in 2011. RBS had 128% more complaints. Many of these complaints include PPI, although some commentators have suggested that aggressive PPI complaints practices may be responsible for inflating the figures somewhat.

The FOS itself is taking on around 1,500 new complaints about PPI every day, despite assurances from banks that people would receive prompt compensation in respect of PPI mis-selling. In total the ombudsman reports over 400,000 complaints about PPI, with a ruling in the customer’s favour in 7 out of 10 cases.

These statistics show the extent of PPI mis-selling claims and potential recovery in the UK.

How can PPI claims companies in the UK help?

While PPI claims companies may take a fee for successful recovery of funds (what commercial organisations would want to work for free?) and while some, including Which?, have called for the Government to increase regulation of such claims management companies, they nevertheless provide an expert and valuable service for consumers in the UK. If PPI mis-selling is becoming known as one of the biggest, if not the biggest scandals in UK financial history, it follows that mass awareness for the public should be welcomed, whether it is from regulators or from private companies who can help people recover mis-sold PPI.

In response to proposed increased Government regulation, Farrow says “I’m not convinced they should be berated to such an extent. I’ve received random texts from companies telling me to get in touch to claim my PPI compensation. I’ve even had the odd call. Slightly annoying I’ll admit, but I hardly feel as though I am being exploited.” Such spam marketing tactics should, nevertheless, be avoided. With all the TV, newspaper and radio adverts and substantial budgets being invested in online marketing, there is no excuse for cold calling or blanket SMS messages. Farrow argues that this part of the process should be regulated. Nevertheless regulations are already in place; it’s more of an enforcement issue.

Stating that PPI claims management companies do have a positive role to play, Farrow reflects on the endowment mis-selling scandal around 10 years ago, “when many home owners received compensation after their own efforts to get a payout were blackballed by lenders. Hard-nosed tactics by claims handlers certainly got up the backs of lenders whose complaint procedures were found to be wanting – and many home owners soon got their just reward.”

“History”, he continues, “ is repeating itself with PPI (payment protection insurance) policies, which were designed to cover loan and credit card repayments in the event of illness or redundancy.”

Without PPI claims companies to fight for the consumer, the banks may be even more reluctant to pay out and may drag their heels. While the banks argue there are an increasing number of fake complaints, this number is extremely small in comparison with bona fide compensation claims.

And yes, individuals can claim themselves without hiring a company and it may be easier than before, as people like Martin Lewis of Money Saving Expert will advocate. But, as with other areas of claims and law, hiring a professional versed in the field can provide more benefits that you may otherwise receive.

Conclusions

Ultimately, PPI claims companies in the UK exist to help strengthen the case of the consumer against the banks in what is becoming the biggest scandal in UK financial history, supported by a solid legal position. Without claims companies, the banks may end up paying out significantly less, leaving some people out of pocket in respect of money they are legally entitled to.

One such useful claims company is Payment Protection Reclaims. Their experts have helped secure £40 million in compensation for their customers.

Flickr image courtesy of images_of_money

Legal Author

Legal Author

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  • Jon

    Having worked on a PPI remediation project at a UK bank I have to say the existence of PPI claims companies baffled me and continues to do so. Their marketing approach seems to based upon the premise that they have expertise in making the claims and that they will save their clients the time required to make these claims. This is a case of selling their services through inspiring doubt and fear amongst those already entitled to a reclaim.

    In reality a PPI claim requires one phone call or one letter (and let’s face it there are templates all over the web to help with this). The claim will then enter a structured process (audited and signed off by the FSA) at the financial institution concerned and no amount of PPI claim company nagging and chasing will change the outcome or the speed of this process. There is no specific expertise required (in fact most claims handlers have minimal training and my dealings with the companies revealed that there are no qualification requirements for employment and a huge staff turnover) and any time saved by clients on the phone to the bank or writing letters is negated by the fact they have to do just this with the claims company instead – isn’t there a saying about cutting out the middle man?

    The only way I can perceive a PPI claims company’s services ever being useful is when there is actually no valid claim yet they may know how to play the system in such a way that they can invent one. This approach is just what has created the volume of fake claims as the firms chuck a claim for every loan and credit card they can establish that their client has ever had at the bank remediation teams regardless of whether the client thinks they were mis-sold PPI or not. When it turns out that PPI was not even sold to the client, what have the claims company lost? Precisely nothing, but these claims do create extra expense in time and staffing for the banks as the have to be dealt with – and who’ll bear the brunt of this extra expense. Well, at certain banks you could say it’s the taxpayer, at others simply the bank’s existing client base.

    Don’t get me wrong, I am not bashing the claims companies because I feel the idea of reclaiming PPI for policies that were mis-sold by banks is wrong or unjustified. On the contrary, during my time working in this arena I saw some shocking examples of mis-selling and this needs to be put right. However, what I do object to is the fact that consumers (very often vulnerable individuals) who were mis-sold this product can effectively be mis-sold again, this time in relation to the ‘service’ PPI reclaim companies are providing for extortionate fees.

    Come on people, you can do it yourself!

  • Jon

    hi, thought id give an update.

    Since posting that previous comment, my new partner found that he had been mis-sold PPI on a credit card from around 4 years ago.

    I tried to help him make a claim against his bank, however after 6 hours of being passed from department to department and being put on hold im starting to see the appeal of PPI claims companies, and – against my grumblings – my partner has started to engage with a company he found on line who will pursue his claim for no win no fee, and take a percentage on the back end.

    Thought id post and i will keep you all updated with the status of his claim – perhaps i’ll be proved wrong?

  • YouBlawg

    Hi Jon,

    Thanks for your detailed comments. I appreciate your position, particularly as my partner is a bank manager at a UK bank which has to deal heavily with PPI claims. One of the funniest stories she told me was when a customer said that they had wanted to get payment protection insurance at the time, had understood the position, but still wanted to claim back the PPI.

    Hope that PPI company does a good job for your new partner.

    All the best,

    Gavin Ward
    Director
    YouBlawg Limited

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