Claims management companies (CMCs) have new standards and rules to abide by. But, is this the wrong time for a significant change in regulation?
The Financial Conduct Authority (FCA) standards for CMCs have now been in place for a month. Over 900 companies applied to the FCA for temporary authorisation to continue with their work. The FCA will now check that each firm meets specific criteria and standards.
These new regulations include certain levels of customer service by outlining expectations and work, as well as guidelines about advertising. These rules apply to all types of claims companies, not just those handling PPI. However, PPI claims remain the most complained about financial product due to mass mis-selling.
It’s estimated that over 60 million PPI policies were sold to UK consumers. Although it’s not known how many of these policies were mis-sold, it’s possible that millions of people are due refunds.
But, with new guidelines and the looming PPI deadline, it might not be the best time for a big change for CMCs.
The Impending PPI Deadline
The FCA PPI deadline is set for 29th August 2019. As this date approaches, individuals must act to submit PPI claims and find out if they are due a refund from their banks and lenders. The FCA wants the deadline to encourage people to file claims, rather than put it off. Since the PPI scandal emerged over ten years ago, individuals have been able to submit applications to their banks for a refund.
To date, over £34 billion has been refunded to customers. Many individuals were mis-sold multiple PPI policies, resulting in an even bigger payout. The landmark Plevin case also set a precedent for even more people to receive refunds. The rule allows people to submit PPI claims if over 50% of the policy amount was a commission. At the time of the mis-selling, most high street banks had 67% commission.
The PPI deadline has caused some of the banks to receive an influx of PPI claims. Lloyds Banking Group is currently handling 13,000 claims per week. Many of the large lenders continue to put aside millions of pounds to compensate customers.
Lack of PPI Claims Companies Could Be Detrimental
Consumers have a choice to submit PPI claims themselves or use the services of a reputable PPI claims company to handle the case on their behalf.
According to research, 67% of people who made a financial claim would not have done so without a claims company. This demonstrates that there is a demand for reliable and trustworthy firms to handle cases on behalf of customers.
But, as the PPI deadline edges closer, claims companies are likely to turn their attention to another type of claim or stop taking cases altogether. A reduction in the number of PPI claims companies could be problematic for individuals who want a company to handle a case on their behalf.
With new rules from the FCA, some companies may have already stopped taking new cases, as the workload to change processes for just a few more months may be too demanding.
Although individuals can claim PPI themselves, many may prefer having a CMC to act on their behalf and research old PPI policies. This means any individuals who want a claims company to work on their behalf should act soon. Thankfully, a few reputable companies remain to handle the claims before August.
Logican’s claims management software is ideal for CMCs handling PPI before the impending deadline. The best PPI claims companies are using the software to process high volumes of claims before the deadline.
