CMCs that want to help as many consumers as possible to pursue claims for mis-sold financial protection have little time left to develop an effective strategy now that the FCA have confirmed an August 2019 deadline for PPI compensation, says Yaakov Smith
August 2019 has now been set as the date that claims for mis-sold payment protection insurance (PPI) must come to an end. The Financial Conduct Authority (FCA) had provisionally set the deadline for June of that year, but in the end decided to move it forward by two months. That’s most likely due to a large-scale advertising campaign that the FCA wants to run for two years starting this August, advising people to check if they can claim.
PPI, of course, was a financial product designed to protect people in the event of becoming ill, losing their job or even dying — and not being able to pay back a loan or mortgage to a bank or clear their credit card bill. But as practically everyone now knows, it was mis-sold on an enormous scale, with many people unaware they had it and were paying for the product. Others felt they had no choice but to accept it when applying for financing.
For claims management companies, it’s very big business. To date, £26.5 billion has been paid out since January 2011 by the banks for mis-sold PPI, while the claims firms handling the cases have raked in around £5 billion in fees. And, with 45 million policies sold since 1990, there’s a lot more to come.
That’s because, as the FCA says, imposing a final deadline means that “people who were potentially mis-sold PPI will be prompted to take action rather than put it off. We believe that two years is a reasonable time for consumers to decide whether they wish to make a complaint”. Additionally, under new FCA guidance, people who were refused PPI claims in the past will be eligible to make a fresh complaint.
Claims management companies all over the UK are certainly gearing up for a windfall in claims business, so those looking to maximise their profits in this sector are turning to claims software for assistance. So what can it do that people can’t? Effortlessly deal with mountains of claims is the answer.
Essentially, claims management software enables firms to do a lot more without expending time, effort or expense in doing so. Instead of building up teams of personnel to manually deal with the claims process (a hugely expensive undertaking and one that is always prone to costly errors), it can all be handled by computer. Equally importantly, this kind of cutting-edge business software is created to be highly intuitive. Claims handlers and those working in call centre operations can use it without requiring any specialist training; essential in maximising company performance and efficiencies.
Additionally, some of the best claims software on the market today is designed to be easily reconfigured or adjusted to take into account new legislation or other changes. This is vital for keeping on top of such fast-changing claims sectors as PPI. It helps to ensure claims firms don’t miss a beat and profit from their ever-increasing workloads.
Will the FCA deadline mean an absolute end to PPI and related claims? Not entirely. While the mis-selling scandal may be drawing to a close, the selling still goes on, only this time with wiser financial heads — on both sides of the transactions. Any complaints that arise from PPI after August 29, 2017 will not, therefore, be subject to the FCA claims deadline.
In the meantime, CMCs are set to profit from the deluge of PPI claims to come in the next two years. Operating in this tight deadline means they’ll have to use every tool at their disposal to get the job done on time.
Yaakov Smith is a founding manager of Logican, a leading British developer of software solutions for businesses