FCA Takes Over Regulation of Claims Companies
With just five months left until the PPI deadline, the Financial Conduct Authority (FCA) has now taken over regulation of PPI claims companies.
Last year, it was announced that the FCA would take over from the Ministry of Justice in regulating claims management companies (CMCs). Currently, the Claims Management Regulator lists all registered and authorised CMCs on its website. Many PPI claims companies also have their authorisation number listed on their websites as a reference for customers to confirm their status and authority.
The CMC market has grown significantly in the past decade. Part of this is due to the millions of mis-sold PPI policies — the FCA estimates that 3 million policies were mis-sold.
But the increase in companies called for stricter regulation and monitoring. As such, the FCA intends to bring in more stringent rules, and all companies that plan to continue operating should have now applied to the FCA.
Among the reasons for the enforced regulations are that some companies scammed individuals out of money and excessively cold called customers. One Carmarthenshire-based firm made 146 million calls over four months and was fined for its action.
In another instance, an individual took upfront money from consumers, claiming he would submit their PPI claims. However, none of this was true and, as a result, he was sent to jail for fraud. Many customers who paid money upfront never received a refund.
These are just two examples demonstrating why stricter regulations need to be imposed on PPI claims companies — to protect consumers and give them access to a fairer claims market. It also allows fair and transparent claims companies to work more effectively for consumers.
What Are the FCA’s Plans?
It’s been a busy year for PPI claims companies, with the government imposing a fee cap last year. This means companies cannot charge more than 20% + VAT on successful claims — and it was a huge blow to the many companies charging more than this amount. All companies must also operate on a no-win, no-fee basis.
Now that the FCA is in charge of claims companies, there are further rules for CMCs to adhere to. The FCA announced some of its intentions for claims companies before April, and its guidelines include:
Keeping phone records for up to 12 months
Notifying customers of free alternatives when processing claims, such as submitting a claim independently
Clearly outlining all of the charges involved
Ensuring “lead lists” are legally obtained to prevent cold calls if consumers have opted out.
No doubt, the FCA will be introducing more rules for claims companies to follow over time.
The Impending FCA PPI Deadline
For nearly two years, the FCA PPI deadline advertising campaign has been seen across the UK on billboards, television and radio. Arnold Schwarzenegger’s robotic head has heavily featured, reminding people to check for mis-sold PPI policies and submit a claim.
29th August 2019 is the cut-off date for consumers to submit claims to the bank, and PPI claims companies will not accept any new clients after the deadline.
To date, over £34 billion has been paid to customers by the banks. By the time the deadline arrives, this figure could be close to £40 billion. Some claims will be resolved after the deadline as the banks deal with the influx of last-minute claims, while the Financial Ombudsman Service (FOS), which resolves complaints referred to it, also has a large backlog of claims to process. Some claims may take up to two years to be resolved at the FOS.
The Next Step for PPI Claims Companies
The PPI deadline is now just a few months away. If customers haven’t already started the process of reclaiming, they need to do so as soon as possible.
As for PPI claims companies, many consumers might see services evolve to take on different types of claims. Pensions, mortgages, packaged bank accounts and payday loans are all viable markets claims companies might switch to, while others might revert to different sectors, such as debt management.
In the meantime, only PPI claims companies registered with the FCA can handle the remaining PPI claims. The best PPI claims companies are still available to help customers submit their PPI claims. Using claims management software, these companies can process large volumes of claims effectively as the deadline gets ever closer.
Logican’s claims management software is helping the best PPI claims companies as they work with individuals to submit PPI claims. Find out more about how to find a reputable PPI claims company.