What we Know About the PPI Deadline

The deadline for making PPI claims has provided no small amount of confusion for many potential PPI claimants – not least because it is not a certain thing. The deadline has been under discussion for some time, but so far no firm date has emerged and many of the suggested dates are little more than rumours. Even so, there is enough useful and reliable information around to be helpful. Here is everything important that there is to know – so far at least – about the PPI deadline:

Will There Be a Deadline?

Some organisations and consumer rights activists have questioned whether there even should be a deadline for making PPI claims. The banks have cheated millions of consumers out of billions of pounds and it can be hard to even find out you’ve been cheated. In some people’s books, this means that introducing a cut-off point just gives dishonest a get-out-of-jail-free card for any refunds that have not yet been made and lets them keep the remainder of their ill-gotten gains.

Nonetheless, unless there’s a quite sudden and significant about-face from the Financial conduct Authority (FCA), there most certainly is going to be a deadline for making PPI claims. The only question really left on the table is when that deadline will be.

When is the Deadline Likely to Be?

A few possible dates have either been mentioned by the FCA or flown around as rumours at one time or another. In late 2015, a deadline of Spring next year was being talked about. Much more recently, it was suggested by the FCA that the deadline could be set for the middle of the following year – perhaps sometime in June 2019.

This is the latest concrete suggestion of a timeframe in which the PPI deadline could fall. However, at the time this suggestion was made it was expected that we would have an announcement by now. Since then, the FCA has declared that it will take another couple of months to announce a firm date for the deadline. Some have suggested that the deadline itself will be pushed back proportionally, suggesting a mid-late 2019 date. This is essentially speculation, but is not completely unfounded.

When Will We Know?

While there is no firm date for the announcement any more than there is for the deadline itself, things are a bit clearer in this regard. The short answer is that we can confidently say that, barring further announcements to the contrary from the FCA, we will finally know the Payment Protection Insurance deadline soon.

Originally the FCA was planning to reach a decision and announce it to the world by the end of last year. However, due to the very large volume of contributions and responses the regulator received, it pushed back this announcement a little in order to allow time to properly assess them. The announcement is now expected within the first quarter of this year. We don’t know exactly when we can expect a decision, but it should be before April.

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Bank of England Decides to Keep Interest Rates in Place

The Bank of England has voted to keep interest rates at their current low levels for the time being. Only two members voted in favour of increasing the rate to 0.75%, with seven voting in favour of keeping rates at just 0.5%.

Continuing low levels of inflation were a key factor in the bank’s decision to keep rates where they are. There was, according to the bank’s minutes, a “material spread of views” on what the outlook was for inflation in the near future, and what the risks associated with interest rates were. However, even if through different reasoning, it emerged that the majority of members agreed that rates should be kept steady for the time being.

According to the minutes: “For most members, the outlook for inflation in the medium term justified maintaining the current stance of monetary policy.”

It seems that the two members who vote in favour of an increase were Martin Weale and Ian McCafferty. For many, this will not be a surprise. Weale and McCafferty have been consistently voting in favour of interest rate rises since August, and in the run-up to the meeting there was some speculation about whether they would continue this trend or not.

It was judged by the meeting that interest rates remaining lower than had been hoped for was “partly the consequence of a margin of spare capacity bearing down on domestic costs and prices.” This, according to the minutes of the meeting, created a definite possibility that expectations for inflation in the medium term would be lowered. The period for which inflation would stay low – specifically under the 2% level – could therefore be lengthened. 2% is the level of inflation which the bank currently hopes to try and maintain, and it was felt that continuing to keep interest rates down could help the situation.

October saw the annual rate of inflation rise to 1.3%, up from the previous month’s figure of 1.2% but still well below the hoped-for 2% level. Just last week, the Bank of England issued a warning that the next six months could see the rate of inflation fall as far as the 1% level.

The current interest rate of 0.5% has been in place since March 2009. The Bank has repeatedly decided against immediate increases in a hope that the low rate will facilitate recovery in the UK’s economy.

The Bank’s nine members voted unanimously on other issues, such as the decision to leave quantitative easing unchanged.

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[Guest Post] Tales of a PPI Claims Handler – Delay Tactics, Low Refunds and Billions Saved in Compensation

Time was when a compensation case went one of two ways; no payout or full payout. But part nationalised bank, Lloyds, and other lenders are avoiding expensive mis sold PPI refunds by using a third option – a partial payout.

As you read this ‘upheld in part’ is being printed on thousands of refund letters in bank offices across the UK and it’s being used to save billions of pounds in compensation.

Limiting the damage

We’re seeing more and more ‘upheld in part’ mis sold PPI offers from banks with around 10% off the full refund amount. It may not sound like much but take 10% off the estimated total refund bill and you’re looking at a saving of over £2bn. With £18bn set aside so far for PPI refunds and the total refund bill estimated at anywhere between £25 and £40 billion, UK banks and lenders are looking at a lengthy and costly period of payouts. By handing out partial refunds it looks like Government-owned Lloyds and other banks have decided to try and limit the damage.

What ‘upheld in part’ means

In an ‘upheld in part’ situation the lender admits to mis selling the entire PPI policy but decides that you should have had some cover and takes the cost of that cover from the refund. It’s like taking a £30 shirt back that you don’t want and the shop giving you £15 and another shirt of it’s choosing, saying that it still thinks you need a shirt. Ludicrous.

What they should be doing is giving you all of the money back or asking ‘do you want us to take the cost of a more suitable policy?’. The (even more) ridiculous thing is: while it may be acceptable to offer another policy if the loan is still active, in most of the cases we come across the loan has been paid off so any cover charged for is completely unnecessary.

An example from a refund letter, this customer had three loans with two ‘upheld in part’ and was owed an additional £1,400 including interest.

It’s easy to think you’ve been fully refunded (and hard to get to the truth)

If the refund letters adequately explained what ‘upheld in part’ means it wouldn’t be so bad, but in my opinion, they don’t. As a result the recipient could easily miss the fact that they have not been refunded the full amount. The picture above shows a refund amount, which may lead people to think that they have received their full PPI refund. In reality they have not only been done out of money that they paid into the policy, but they’ve also not been paid the 8% interest on top as well. A double slap in the face.

To clarify what they’ve done the banks should include a sub-header in the letter titled ‘upheld in part explained’ with a paragraph explaining that they’ve decided that we did mis-sell you PPI, but think that you should have had some cover. As a result we’ve taken some money off your refund to cover the cost of a more suitable PPI policy. It’s still not right, but at least it would be explained and the customer would know that they haven’t got a full refund.

On their radar

The MOJ is aware of ‘partial refunds’ and recently included the topic in their December ‘13 Special PPI Bulletin:

Alternative redress

Some banks have been making offers on an ‘alternative redress’ basis/calculation on PPI complaints since early 2013. This is sometimes also referred to as ‘comparative redress’ or ‘partial upheld’.

These offers need to be properly assessed and instructions from clients should be obtained about whether the offer is appropriate. Further information about alternative redress offers can be found on the FOS website at – http://www.financial-ombudsman.org.uk/publications/technical_notes/ppi/redress.html

No going back

But say you knew what ‘upheld in part’ meant and that you were still owed more mis sold PPI money – do you take the smaller lump now or wait potentially another 18 months for the full amount? In our experience most people go for the smaller amount mainly because they may have to wait a while for the full refund.

And once they accept the offer there’s no going back, the bank has the right to keep the extra cash. Either way, if people take the payout or wait for the full amount the bank are saving money – when they should be giving people all of their money back. Moral of the story: beware of ‘upheld in part’ offers and know that if you get one – you are still owed more.

By John Gregory

John writes for a PPIClaimsAdviceline.com as well as a number of financial blogs, he also create content for infographics, FAQ’s and personal finance sites. You can find him on Google+ and Twitter, get in touch – he doesn’t bite. Unless you’ve been mis-selling financial products.

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Lloyds Fined £35m for Dickensian Sales Incentives

Lloyds bank has been fined £35m for a sales incentive scheme that saw staff threatened with demotion if they didn’t hit targets. One adviser felt so pressured that he sold products to himself, his wife and a colleague just to keep his job.

The Financial Conduct Authority (FCA) Regulator issued the fine after saying Lloyds ‘created a culture of mis-selling by rewarding staff for selling thousands of products to customers regardless of their need or suitability’.

Sales incentives at Lloyds were deemed to be inappropriate and detrimental to customers

The fine is the ninth biggest ever issued by the City regulator and came as a result of an investigation into incentive schemes at Lloyds between 2010 and 2012. The bank recently pumped a further tranche of cash into their PPI compensation pot, which stands at around £8bn and is the biggest refund bill of any UK lender.

The investigation focused on Lloyds’ sale of investment products and found advisers were offered champagne and £1000 cash for hitting sales targets. The FCA investigation uncovered the following figures between 1 January 2010 and 31 March 2012:

– 399,000 Lloyds TSB customers bought 630,000 products, spending over £1.2bn and paying £71m in protection premiums

– 239,000 Halifax customers bought 380,000 products, spending £888m and paying £38m in protection premiums

– 54,000 Bank of Scotland customers bought 84,000 products, spending £170m and paying £9m in protection premiums

Some of the individual bonuses received by staff are eye-watering, including one Halifax manager that received £39,000 for three months sales, almost doubling his annual salary. Another controversial product, packaged bank accounts, were rumoured to be being investigated by the FCA, but they refused to comment. Lloyds stopped selling packaged accounts at the beginning of 2013.

Good news for tax-payers though as the Government-owned bank was able shave 20% off the £35m fine buy settling earlier with the regulator.

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Bankers to face jail time… Ooooh, that’s more like it!!

A report by the Parliamentary Commission on Banking, published today, has recommended that “senior persons” who run banks in a “reckless manner”, should be jailed and have their bonuses clawed back… nice!!

According to a report by a cross-party group of MPs and peers, led by Andrew Tyrie MP, bankers had escaped “personal responsibility” for their actions following the banking collapse, and said that radical reforms are required to restore trust in the UK banking sector. “Where the standards of individuals, especially those in senior roles, have fallen short, clear lines of accountability and enforceable sanctions are needed,” said Mr Tyrie.

The 576 page report, which is the fifth and final publication by the commission, brings to an end a 6 month investigation during which it’s members asked 9,000 questions of hundreds of witnesses, during 73 sessions which lasted a total of 161 hours.

The key recommendations of the report are:

  • Introduction of a new Senior Persons Regime, to ensure that the most important responsibilities within banks are assigned to specific, senior individuals so they can be held fully accountable for their decisions
  • Making reckless misconduct in the management of a bank, a criminal offence carrying a custodial sentence
  • For bonuses to be deferred by 10yrs so that they can be clawed back retrospectively, even after the senior persons have left their position
  • Introduction of a new Licensing Regime underpinned by new Banking Standards Rules to ensure that senior persona are subject to the full range of enforcement powers
  • Replacing the existing inadequate and confused statements of principle with a new set of Banking Standards Rules

Recommendations by the commission, which was set up last year in the wake of the Libor-rigging scandal, which require legislation are expected to be added to the Banking Bill that is currently going through Parliament, meaning a criminal law for bankers could be in place before the end of 2015.

We’re still digesting the contents of the report and will no doubt be discussing it in more detail in the coming weeks!

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Banks Could Face £10b Costs Over Swap Mis-Selling

11 British Banks including Barclays, Lloyds Banking Group, Santander UK and HSBC have agreed to evaluate the sales of interest rate swap products. The investigations will be supervised by the Financial Services Authority (FSA) and carried outside alongside independent auditors.

Groups representing the small businesses disadvantaged by being mis sold interest rate swaps have said tens of thousands of businesses were forced to lay off staff or shut as they struggled to pay charges on products they had been mis-lead into purchasing.

Whilst banks had set aside £730m to cover the costs of the scandal, last year, the number of cases put forward for review by the FSA have exceeded their expectations. Last week, sources within Barclays and the Royal bank of Scotland said there would be substantial increases to the money put aside for compensating businesses that were inappropriately sold financial products.

Estimates within the banks put the cost of redressing the issue at £1.5b. However, industry experts and lawyers have said banks are underestimating the cost of compensation. They have instead predicted banks may face a bill of up to £10b. Should this prove to be the case, the rate mis-selling episode would be on the same scale as the PPI scandal which cost banks over £12b. Initially banks had anticipated costs of around £3b but this quickly escalated.

The Business Secretary, Vince Cable has dismissed such claims saying that the swap rates mis-selling would not be on par with PPI.

Martin Wheatley, the man heading up the FSA investigation said that the regulator had “not ruled out” taking individual actions against individuals and institutions involved. However, he added that no decisions would be made until the reviews of around 40,000 cases dating back to September 2001 had been completed. Should the FSA fine any institutions for selling these complex financial products outside regulations, the cost of the scandal would further increase.

The final bill to the banks involved will only be clear in 12 months  – the deadline set by the FSA for all small and medium sized businesses affected to receive compensation.

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Banks Push FSA for PPI Deadline

According to The Times newspaper, the British Bankers Association (BBA) are in talks with the Financial Services Authority (FSA) in order to secure a deadline for borrowers to reclaim their mis-sold PPI premiums. This comes as no surprise, as it was only in Nov 2012 that the Confederation of British Industry (CBI) director, John Criland, publicly called for a “line to be drawn under PPI”.  The scandal of wrongly sold payment protection insurance to millions of unassuming customers has rocked the banking world – both because of the damage to many bank’s reputations and integrity, and also due to the fact that their mistakes have caught up with them at a cost of billions of pounds in compensation payouts.

The costly affair is ongoing with over 1,000 borrowers signing up to reclaim back the money they are owed, on a daily basis. The total PPI compensation bill is currently set at around £13bn and rising.  It is this worry that has prompted the BBA to attempt to bring an end to the compensation process – rumours are they are urging for the deadline to be set for May 2014, as there is a real concern that the total compensation bill could exceed £25bn. The founder of MoneySavingExpert.com Martin Lewis has labelled it ‘a disgraceful proposition from the banks,’ quoting that ‘The FSA needs to laugh it out of the room.’

Both the BBA and the FSA are not as yet commenting any further on the issue.  It has emerged the banks propose to sweeten the blow by offering to fund a prominent advertisement scheme explaining to the general public how to claim back PPI and by what deadline.  Claims management companies who have been working to help customers reclaim their PPI  since the scandal arose are outraged by news of such a deadline.  A spokesperson for Lancashire based PPI Claims Company, PPIClaimsAdviceline.co, has described the behaviour of bank bosses as ‘shameful… The banks missold people PPI for years; years should be the timescale that those customers get given to reclaim what is rightfully theirs, not months.’

Not knowing that they even had PPI on their cards/loans/mortgages is a major factor in why the uptake on reclaiming payments was not instant and is still ongoing.  Although banks were supposed to have written to customers to inform them of what they might be entitled to back, many haven’t.  Previously people had three years from finding out they were eligible to process their claim.  Now, they may only have until next summer to get their compensation- regardless of when they discover their banks owed it to them.

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New Years Gifts From The FSA

I for one am glad that the FSA has finally decided to flex it’s regulatory muscles and take some positive action against the banks. On the 31st December, new rules came into force banning commission payments to financial advisers and banks’ sales staff for the sale of financial products. Meaning that financial advisers will now have to charge their customers for their services rather than rely on commissions from the lenders for arranging the finance.

It was these commissions that many believe are to blame for the wholesale mis-selling of payment protection insurance. And today, the FSA has released a statement saying that they have fined the Co-operative Bank, £113,300 for delaying PPI claims.

They say it’s because the Co-op placed 1,629 claims on hold in the early part of 2011 pending the outcome of the Judicial Review. But they weren’t the only bank to do so and I hope they take action against those too.

Hopefully soon, and with better judgement than they used when dishing out fines for the mis-selling PPI, where the likes of Lloyds and RBS escaped being fined while companies like Land of leather were fined £210,000 – absolutely ridiculous in my opinion. Especially considering fact that Lloyds are the single largest provider of payment protection insurance policies in the UK and have had to set aside a whopping £5.3bn to repay their customers!!

If you’ve had PPI on any of your borrowing in the past 6yrs, then make it your new years resolution to claim back the money you’re owed. You can do it yourself for free, and we’ve provided a quick guide here.

But if you feel more comfortable using a claims company, I’d recommend www.PPIClaimCo.org, as they don’t charge anything upfront and will also claim back any unfair credit card charges for you too.


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London Credit Union under Scrutiny for Lending Client Money to Local Church

The Pentecostal Credit Union has been shamed after putting its clients money at risk. The credit union had been secretly directing funds to a local church organization.

The Financial Services Authority (FSA) has publicly declared the credit union’s behavior as disgraceful. Based in southwest London, in Balham, the Pentecostal Credit Union has channeled at least £1.2 million. The disgrace arises as the union issued these loans in the names of their clients; the money was actually being loaned to the Pentecostal church organization. The FSA’s director of enforcement and financial crime is shocked that a credit union would put the needs of their own members behind a different organization.

This is the second incident in just a few days involving credit unions. Only days earlier, the North Yorkshire Credit Union collapsed. This union is now the sixth union to collapse this year.

The Pentecostal Credit Union has been lending money to the church organization for a while now. The FSA warned the credit union to stop loaning money to the church organization in 2002. Despite this warning, between 2007 and 2011 the credit union issued 20 loans in the names of 15 different clients. The director of the union guilty of this, Reverend Carmel Jones, had signed and approved 14 of the loans and had even signed a majority of the checks. Jones escaped without even having to pay a fine, as it was identified that financial penalties would impact all members of the credit union. If these financial circumstances were not in play, Jones would have been facing a fine of £60,000. Despite escaping this however, Jones is now banned from working within the industry.

While the organization was initially making repayments, the repayments came to a halt in 2009. The result is that the organization owes at least £670,000.

The Pentecostal Credit Union has cooperated well with the FSA, agreeing to replace its entire management… and we all know what happens when financial institutions agree something with the FSA, don’t we??

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FSA Warns Lenders Against New-Style PPI Policies

Financial services firms have been warned not to devise harmful new versions of discredited payment protection insurance (PPI) policies.

The warning comes from the Financial Services Authority (FSA) and Office of Fair Trading (OFT).

They say they will use their powers to stop firms selling new types of loan insurance that might damage customers.

The current clampdown on past mis-selling will cost banks and other firms billions of pounds in lost income.

Big banks in the UK were the main sellers of PPI policies, to people who took out mortgages, credit cards or other loans.

As a result of a comprehensive defeat in the High Court earlier this year, the banks have now been forced to set aside at least £6bn to pay compensation to hundreds of thousands of customers to whom they mis-sold the policies.

In the wake of this, the authorities are worried that financial services firms will simply invent new types of “insurance”, which could equally expose customers to being bamboozled into buying a policy they do not need and which might not cover them in any case.

Margaret Cole, FSA managing director, said: “This is the first time that the FSA has issued guidance on the design of a specific product.”

“The two organisations [FSA and OFT] will continue to monitor developments in the market, and will take appropriate action under their respective powers where firms’ products or practices risk causing detriment to consumers,” she added.

Tough stance

The mis sold PPI claims scandal, which followed similar episodes involving personal pensions and mortgage endowment policies, has at long last forced the financial authorities to adopt a tougher attitude.

Instead of waiting for problems to develop and then clearing up the mess afterwards, they will now intervene to try to stop these problems developing in the first place.

The FSA is due to be dismembered, with responsibility for consumer protection being passed to a new Financial Conduct Authority (FCA).

The current head of the FSA, Lord Turner, recently said it was vital the FCA had the power to ban financial policies before they were sold.

“In financial services, the potential for the customer to be ripped off is simply far greater than in other sectors of the economy – and the consequences potentially more significant,” he said.

In a consultation on their proposed new guidance, the FSA and OFT say they are worried that:

  • firms are not properly identifying which groups of people might genuinely benefit from their “protection” insurance.
  • the policies may not meet the customers’ real needs.
  • the payout from a successful claim may not be good enough for a customer.
  • the policies may be too complex or opaque for customers to compare.

“This is a key time as the market shifts away from PPI and firms begin to develop new products or product features – such as short-term income protection or debt freeze or debt waiver as elements of a credit agreement or mortgage,” the FSA said.

The OFT warned that it would take action, using its powers to regulate providers of credit under the Consumer Credit Act, to stop improper or unfair selling practices.


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