The regulator has announced a final deadline of 29 August 2019 for consumers to reclaim mis-sold PPI. If you think you've been mis-sold you can reclaim for free, but don't delay – the reclaim system is likely to get jammed up now a final deadline's in place, so get ahead of the queue.
The Financial Conduct Authority (FCA) has said it will run a two-year communications campaign, to be launched in August 2017, to alert consumers to the deadline.
It's also announced new grounds for making a PPI claim, following a Supreme Court judgment in November 2014 – known as the 'Plevin ruling' – which extended the definition of mis-selling. You can now claim if your provider earned a high level of commission from your PPI and this wasn't made clear – millions more may be able to claim as a result.
PPI stands for 'Payment Protection Insurance'. It's designed to cover your loan or credit card repayments in the event of an accident, sickness or unemployment – but was frequently mis-sold. We've long campaigned on this, and have had over 6.5 million reclaim template letters downloaded.
Here's a full list of what was announced today – plus explanations of what it all means from MoneySavingExpert.com founder Martin Lewis.
August 2019 deadline set for claims
Claims over how PPI was sold must be received by the firm you're complaining to on or before 29 August 2019, or they won't be considered. Complaints received ahead of the deadline will then be allowed to run their course.
Martin says: "PPI has been the biggest financial scam of all time – over £20 billion pounds repaid so far, and it wouldn't be surprising if it hit £30 billion before it ends. Yet it wasn't done by dodgy blokes in back alleys, but by bankers in pin stripes.
"The deadline is a mistake. The stats are plain. Flabbergastingly, in over half (54% in the last 12 months) of all cases where after the bank rejects a PPI reclaim people take it to the independent Ombudsman, the bank's rejection is overturned. Until we can trust banks to deal with complaints fairly in the first instance, this move to protect their balance sheets should not happen. It is putting the protection of the financial industry ahead of consumers.
"Worse still, many banks make it outrageously hard for people to find out if they ever had PPI. In meetings with the head of the FCA, we pushed hard to ensure that was changed if it imposed this deadline. I can't see anything has changed. Let's hope it'll do this behind the scenes."
There are a few people who will still be able to claim after 29 August 2019, however.
- If you buy a new PPI policy after 29 August 2017, the deadline WON'T apply to any mis-selling claim.
- If you have a live PPI policy now, or buy one in future, AND you make a claim on that policy for a payout (eg, if you become unemployed and claim as a result), if you then find the firm rejects your claim and you want to dispute it and say you were mis-sold, the deadline WON'T apply.
- But if you have a live PPI policy now or buy one up until 29 August 2017, and you want to make a mis-selling claim WITHOUT having claimed on the policy, the deadline WILL apply.
New grounds for claims – millions more people owed
The FCA has today also put rules in place for how firms should handle claims in the wake of the Supreme Court 'Plevin' ruling, which looked at cases where providers earned a high level of commission from PPI and customers weren't told about it.
The FCA now says that if the cost of your PPI was made up of more than 50% commission and you weren't told this, you should get the difference back plus interest. Though these rules will only officially come into effect on 29 August 2017.
Firms will also be required by the regulator to write to all previously rejected complainants who are eligible to claim in light of the Plevin case, to explain the new grounds for claims.
Martin says: "The rules are now pretty simple. If you had PPI and the commission was over 50% and that wasn't explained to you, then you are due back any commission above that plus interest. As bank loans with PPI typically had 67% and banks almost never mentioned it, this means millions more people are owed billions more pounds.
"The FCA will rightly force lenders to write to the 1.2 million whose past PPI reclaims have been rejected, but who may be owed due to Plevin. Yet it should've done the same for everyone whose commission was over 50% – not just those who've already complained. That's what's needed here – after all, it has unjustly imposed the same deadline on the brand-new Plevin ruling as for other PPI issues.
"Instead, consumers must take action themselves. Quite simply everyone who has had a loan, credit card, overdraft, mortgages, store card or any other debt should check now if they had PPI and what the commission level was.
"This ruling of course has a further worry – the fact it may push up commission elsewhere if firms start to think 'aye aye, they won't have a go as long as our commission is under 50%!'"
Claim NOW to get ahead of the queue
If you think you've been mis-sold, today's announcement means you should urgently reclaim. While the deadline's been set for August 2019, the marketing campaign which starts later this year is likely to result in a significant backlog.
Martin says: "This is an urgent clarion call to consumers. PPI was systemically mis-sold on loans, credit and store cards, and commonly mis-sold on mortgages and overdrafts. If you've had one of those in the last 20 years, check if you've got the paperwork, and if so, if it had PPI on it. And ensure you reclaim for free – there's lots of help out there; you don't need to pay someone.
"Do this ASAP – the regulator is due to push big money into publicising the deadline, which will likely jam up the reclaiming system, so doing it now gets you ahead of the queue.
"Plus if you have already made a past PPI complaint that was rejected by the bank but you did not go to the Ombudsman, try to restart your complaint now. Banks have been fined for poor complaints handling – your bank rejection does not mean you weren't mis-sold."
Support for vulnerable consumers
The FCA's said it intends to put in place "enhanced support arrangements" for vulnerable consumers who contact its helpline – though the reclaim deadline will still apply to this group.
Martin says: "We must ensure it isn't just those 'who can' that get their money back. A good proportion of those due PPI reclaims who haven't done it yet are likely to be vulnerable consumers – those with mental capacity problems, mental illness, literacy issues and more. In meetings with the FCA about this deadline we pushed hard that some of the communications budget should be used to help those consumers.
"I'm pleased it has factored this in to an extent. If consumers contact the FCA helpline (it starts in August 2017), if its staff feel they need face-to-face support, it will now be able to do that. However, sadly the deadline still applies here and relies on people to get in touch with the FCA, which will leave many missing out. Charities and others will be forced to pick up the slack."
'Big boost' in PPI cold calls expected
With a final reclaim deadline now in place, unfortunately it's likely to mean an upsurge in the number of spam calls relating to PPI.
Martin says: "This is likely to see a big boost in spam calls and a blast of advertising on social media as claims firms try and take advantage before the deadline.
"While many will be happy to see the PPI deadline to see the end of the more parasitical end of the claims sector, ultimately what matters is ensuring people who were mis-sold in this scandal get justice."
How to reclaim
We've full help and a free tool to reclaim in our Reclaim PPI for Free guide, but in brief:
- Step 1. Find the paperwork. There's no time limit on PPI reclaiming – you can go back as long as you like, providing you've evidence. Check loans, credit cards, mortgages, store cards and overdrafts to see if there was PPI. It will have been called something like 'payment insurance' or 'accident or sickness insurance'.
If you don't have your paperwork, you can request it from your lender going back up to six years. If you can't remember who your lender was, check your credit file, which you can do for free.
- Step 2. Were you mis-sold? Typical examples include if they lied that PPI was compulsory or it'd cut your loan costs; sometimes it was added without asking, or even after you'd said no.
They had a duty to ensure it was suitable for you – it may not have been if, for example, you were self-employed but got unemployment cover, or you had a past medical condition they didn't ask about. And now the simple fact the commission on the PPI was over 50% (which it usually was) and you weren't told counts as mis-selling.
- Step 3: Do it yourself for free. This needs shouting from the rooftops. You do NOT need to pay to reclaim – no way, absolutely not, never! Companies known as claims handlers do very little for you that you can't do yourself, and they take 30% of your payout – often many £1,000s. To do it easily use our free reclaim tool.
- Step 4: Expect a rejection. Sometimes the banks, building societies or other lenders say 'fair cop' and pay out thousands in days. Yet equally they often say no. That doesn't necessarily mean you don't have a case, just that it's the lender trying to put you off. If you believe you were mis-sold, just see this as part of the dance because the real decision comes at the next stage.
- Step 5: Go to the free Financial Ombudsman Service (FOS). If you're rejected, you have six months to take your case to the FOS, an independent body which can adjudicate and force banks to pay you back. To make it easier, our free reclaim tool does this for you. If you're struggling or unsure, the Ombudsman has a helpline – call 0300 123 9123.
What's the background to the PPI deadline?
The FOS has received about 1.6 million complaints over PPI to date, and it continues to be by far the most complained-about financial product. Despite this, plans have long been underway to bring PPI compensation claims to an end.
In August 2016 the FCA said it believed a number of PPI proposals it had consulted on should be taken forward. These proposals included imposing a deadline for PPI claims and launching a consumer communications campaign to raise awareness of it.
The regulator said it would announce the deadline for PPI claims by December 2016, with the advertising campaign expected to start in June 2017 and the final cut-off for claims to be June 2019.
However, when December 2016 rolled around the FCA revealed it was pushing the deadline announcement back to the first quarter of 2017.
What does the FCA say?
FCA chief executive Andrew Bailey says: "Putting in place a deadline and campaign will mean 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.
"We have carefully considered the feedback we received and we still believe that introducing a deadline for PPI complaints and a communications campaign warning of the deadline will benefit consumers."
Additional reporting by Sam Dunn.