Lenders must ensure they are dealing with Payment Protection Insurance (PPI) complaints correctly ahead of the 2019 deadline or face action, the industry regulator has warned.
Consumers have less than two years left to complain about mis-sold PPI after the Financial Conduct Authority (FCA) imposed a deadline on all new complaints.
Megan Butler, director of supervision at the FCA, said banks would be under close scrutiny to make sure they were managing claims correctly and would be strongly punished if they fell foul of regulations.
She told The Times: “The deadline is the deadline, but if we find firms are not meeting the standards we expect, we will take action.”
Ms Butler also said that with banks paying out compensation in about 80% of cases it would indicate ‘widespread mis-selling’, and warned the FCA now have stronger powers to punish individuals thanks to policy changes made last year.
As well as financial penalties for companies or individuals, The Times also reports that the FCA have the power to force banks to write to customers who may have had PPI – begging the question why doesn’t the regulator do this anyway with a deadline approaching?
But some have questioned the introduction of the deadline for fear that consumers will miss out on their chance to check as a result.
An advertising campaign, featuring an Arnold Schwarzenegger impersonator, was launched at the end of August to encourage consumers to check now before their chance to claim is lost, however thousands of viewers found the advert ‘awful and ineffective’.
To date more than £42bn has now been set aside by all UK banks as they continue to be affected by the ‘biggest mis-selling scandal in financial services history’.
Lloyds have increased their provisions 17 times and admitted earlier this year they have seen an unexpected increase in the number of PPI complaints.
The deadline for 29th August 2019 was set by the FCA despite their admission that they do not know how many more people were affected by the scandal.
New guidance passed in August, relating to the legal case known as Plevin, also means just having PPI may now mean some consumers are owed compensation.