The following is a guest blog post regarding the FSA‘s focus on the handling of PPI claims in the UK.
There have been guidance consultation notes released by the Financial Services Authority (FSA) in March 2012. The report indicates that there needs to be further investigation into the ‘root causes’ of complaints of PPI claimants. The advice was directed at the firms who have been responsible for the improper sale of payment protection insurance. This could be interpreted as an indication that the problem with the mis-selling of PPI is still very much a continuing issue. This is only the first recommendation expressed by the document.
Further Indication of a Need for Change
The FSA has also suggested that their guidelines, namely ‘Principle 6’ is not being acted upon. This section of their guidelines suggests that all customers should receive fair treatment when purchasing payment protection insurance. The consultation notes further suggest that there are systemic issues with sales techniques and that many customers are still at risk from being mis-sold payment protection insurance. Where bad sales practice is common within a company, the report suggests that the firms in question should do investigate and then contact their customers directly instead of waiting for a complaint to be lodged.
Opposition to FSA Guidelines
The British Bankers Association (BBA) has lodged legal opposition to the FSA guidelines. The process was unsuccessful and the legal opposition died a swift death when it went to the High Court and was dismissed back in 2011. Although the guidelines are yet to be set in stone, many responsible lenders are already adopting the recommendations. Most of the high street lenders have set aside a fund to cope with the demand for compensation and this is clearly good practice and has gone a long way to returning confidence in our banks.
Questioning Time Limits
The posturing of firms responsible for paying compensation has been mostly positive and there are only a handful of companies that have had negative press as a result of poor compensation schemes. A number of firms have asked the FSA to establish time limits, which will remove their responsibility to customers who fail to make efforts to recover the money owed to them. At the current time, a complaint must be lodged within six years of the mis-sold PPI agreement and a claim that is lodged more than three years after the claimant gains knowledge that a problem with the way their PPI policy was sold. This is not limited to refusing the right of an individual to claim, but it also means that the firm can oppose the right for consideration by the Financial Ombudsman Service (FOS).
Is the FSA Expecting too much?
Many believe the problem with expecting a company that sells a financial product to give money away (albeit money obtained through mis-selling), is like asking a shopkeeper to stop charging people because they once sold a customer a rotten apple. There is no doubt that this has been a costly exercise with lessons learned the hard way. Until there is a solid stance taken from the within the FSA, there are going to be consumers who continue to lose their right to claim compensation for mis-sold PPI. This is why there is still a need for claims management companies to provide a service for people who would otherwise fail to claim compensation.
There are still many people who are filing their own claims by contacting their banks directly, but on the evidence that has come from the FSA, it would be advisable to use a reputable company instead. Gladstone Brookes can help with PPI claims and have a very high success rate.
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