Britain’s regulator, the Financial Conduct Authority, just had to install a deadline for people complaining about being mis-sold insurance because some of the trends emerging from its review into the sector is rather ridiculous.
For example, some people applying for compensation, didn’t even own the product in the first place and another example shows that some people seemingly can’t recall the details around the sale originally happening.
The FCA said in a regulatory statement that Britons now only have until at least “spring” of 2018 to put in a complaint about a financial institution mis-selling them payment protection insurance (PPI) or else lose their right to a claim.
PPI was wrongly sold alongside loans, credit cards and mortgages and banks have been forced to pay out to customers who were wrongly the coverage.
The PPI mis-selling scandal has now cost the banking industry just over £26 billion ($US40 billion) in compensation payments and admin fees.
“Overall, we take the view that a deadline and communications campaign would help bring finality and certainty in a way that advances the FCA’s operational objectives of securing an appropriate degree of protection for consumers and protecting and enhancing the integrity of the UK financial system,” said the FCA in the statement.
The regulator said that worrying trends emerged from its investigation into PPI mis-selling and providing a deadline will help stop them:
- a high and growing proportion of complaints are made via claims management companies, with fee costs to the consumers who use them.
- a high and growing proportion of complaints relate to older sales (pre-2005 and even pre-2000), where the documentary evidence held by firms and consumers is likely to have significant gaps and recollections and oral evidence are becoming increasingly stale.
- A significant proportion of complaints made turn out not to have involved a PPI sale.
- a number of those consumers who told us they intended to complain, also said that they had not yet got around to doing so. The open-ended nature of the complaints-led approach appears to contribute to this consumer inertia – i.e. it does not incentivise consumers to check whether they had or have PPI or progress complaints in a timely fashion.
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