Claims management companies may have thought they can handle PPI claims on their own, but with an expected deluge of claims before June 2019, the smart ones may need a little automated help, says Yaakov Smith
After a staggering £24 billion was paid out by banks in payment protection insurance (PPI) claims, and a further £32.6 billion has been set aside for future compensation over mis-sold policies, the authorities want to bring the entire controversy to a close.
That’s why the Financial Conduct Authority has decided to impose a deadline of the end of June 2019 on PPI claims. Not surprisingly, the decision has led to a surge in claims and companies dealing with them are scrambling to cope, even those with specialist PPI software to swiftly handle mountains of claims.
In justifying the FCA’s decision, its chief executive, Andrew Bailey, said it was the only way to ensure claims did not drag on forever. “Putting a deadline on PPI complaints will bring the issue to an orderly conclusion in a way that protects both consumers and market integrity,” he said. He may wish for a tidy end to the problem that has plagued financial institutions for years, but the task ahead appears anything but easy.
Snowed under with PPI Claims
It’s estimated that around 45 million PPI policies were sold in the UK over the course of 20 years, essentially protecting someone taking out a loan or mortgage (or even applying for a credit card) in case they fell ill or lost their job and were unable to make repayments. PPI would then kick in and cover the payments for the period, until the person started making payments again.
No one is suggesting, of course, that all of those policies were mis-sold. However, a great deal were, hence the enormous collective sum paid out to date.
Now that there’s a deadline on making PPI claims — which the FCA wants to bring into force sometime in the middle of this year — there’s a mad dash among people who believe they were mis-sold policies to make a claim. For those who may have no idea if they were mis-sold PPI on a loan, mortgage or other financial product, they may well get a reminder in 2017, as the FCA is planning a marketing blitz, advising people to check if they can claim.
For its part, the Financial Ombudsman Service, which tries to resolve disputes between ordinary consumers and financial institutions, projects it will handle around 360,000 complaints related to PPI claims this year. It says it’s currently dealing with some 3,000 new complaints every week and that there will be an avalanche of claims made during 2017.
Using PPI software to deal with claims
All of this is heaping enormous pressure on claims management companies dealing with PPI claims. Many have found that the only way to successfully manage the burden is to use sophisticated PPI software that lets them efficiently cut through the workload.
It’s all the more important for claims management firms now, given the projected steep rise in PPI claims, and it helps such companies to be more organised and profitable. How so? By not utilising personnel from such departments as accounting, human resources and IT, freeing them up to work on projects to propel the company forward. Additionally, PPI claims software eliminates the repetitive and mundane task of dealing with each claim manually.
That includes such necessary, time-consuming tasks as having people complete and send back forms of authority. Now, the PPI claims software can automatically generate follow-ups to clients, meaning there’s no need to email, pick up the phone, or whatever else to keep the claim active. It’s not just a matter of saving time, either, but also keeping costs down, with fewer staff devoted to administrative claims tasks. That helps make claims management companies sleeker, more competitive and, ultimately, way more profitable.
Other Aspects to PPI Claims Software
Many claims management companies awash in PPI claims may also find that PPI software can often be beneficial in other areas, too. It can, for instance, handle communications between all parties in agreeing a compensation payment, before following up to make sure it’s paid out. That can otherwise be a protracted and frustrating affair.
Crucially for any claims management firm looking to get ahead, solid PPI claims software will also provide reliable financial projections, based on the current level of claims the company is handling. So from start to finish, the entire PPI claims process is automated and far swifter than if being dealt with manually.
With the countdown to the end of PPI claims now well underway, and an ad campaign due that will surely lead to even more claims, it’s undeniable that there’s going to be a frenzied race to the 2019 finish.
Yaakov Smith, is a founding manager of Manchester-based Logican, which provides software solutions for business, including claims management companies