What Everyone with PPI Needs To Know About The Time Limit For Claiming



Photo from moneybright

Payment Protection Insurance (PPI) was mis-sold to millions of people that took on financial products over the last ten years; but there’s a huge pool of money waiting to be reclaimed, and the sooner the better.

There’s currently no time limit on claims, it’s just that companies only have an obligation to keep your paperwork for six years so after that you would need to have a paperwork trail to prove how much you paid. However, the Financial Conduct Authority (FCA) is planning to change that system; introducing a two year deadline for staking a claim.
This is following pressure from banks and considerable publicity of PPI refunds in recent years to let people know they could be eligible to claim. The FCA also notes it has fined a number of banks and lenders for not efficiently handling PPI mis-selling complaints. It is hoped the deadline will encourage more people to apply direclty to lenders for refunds instead of using third part claims agents, and generally clean up the claims process.

The two year timer would come into play once the rules are in place, meaning consumers would have until at least 2018 to complain about PPI products the think they were mis-sold. As part of the update to the guidelines some customers would also be able to claim for commission they were charged when mis-sold PPI, but only if it was above 50%.
However, the suggestion of this limit has brought cries of complaint from consumer organisations who believe that this sets little advantage in banks paying out on legitimate claims quickly and could lead to a rise in nuisance calls from banks hawking for business from potential victims of PPI mis-selling. It is also suggested that putting the ball in the court of the consumer to claim quickly, when they may not know they have the right to claim is not effective consumer protection.

Under the current system around a third of PPI claims are being handled by claims management companies, who charge a fee for their services. And at the same time, around two-thirds of all complaints to the Financial Ombudsman are about PPI. It seems clear that the currently process isn’t very fair or consumer-friendly. As such, leading organisation Which is calling for simpler claiming processes; tighter regulation on claims management companies and more information on how many claims have been successful so far.

The announcement from FCA is good for the banking industry who have been feeling the pain of PPI refunds for many years; and there was a small increase in banking stocks as a result. A consultation paper on the suggested changes will be published before the end of the year to gather feedback from the banks and lenders involved.