Recent figures from the Financial Services Compensation Scheme (FSCS) have revealed that the number of claims submitted in 2012 for mis-sold payment protection insurance (PPI) was almost double the number from 2011. Just over 11,000 claims were submitted in 2011, whilst the number jumped to more than 19,000 in 2012.
A lot of this is thought to be because of the Financial Services Authority (FSA) ruling that third party companies could become involved and make claims for people, rather than the banks only being able to deal with the customers they have defrauded directly. With people not needing to worry about the claims themselves and instead able to enter their details into a website, then have somebody else contact the bank on their behalf, many more people are coming forward to claim the money that they are entitled to.
The banks were utterly opposed to the idea of third parties getting involved, claiming that it would be unfair and that the consumers would benefit more if they went through the process themselves. However, the rocketing number of claims paints a different picture.
One of the other aspects which is likely to have resulted in more people making claims is the repeated media coverage. Every time that the banks try to resist paying PPI compensation, such as the recent debacle with setting a deadline for PPI claims, they make the headlines again, and more and more people are reminded to check if they are entitled to compensation for PPI payments.
There will have to be a point at which the number of claims begins to fall, but it is certainly not in sight. The main issue for the banks is that there were so many products which they tacked PPI services onto. Credit cards and loans were the main offenders, and the number of those which were taken out whilst the PPI scandal was still ongoing is truly staggering.
It’s worth bearing in mind that the total number of claims paid out is not even the total number of cases which were brought up or that are still ongoing. The last three months of 2012 saw 11,000 cases brought to the attention of the Financial Ombudsman Service, for instance, making up the same amount as the total claims paid in 2011. It’s clear that there are a huge backlog of claims to work through, and we will not be hearing the end of PPI for a long time yet.