I read with a mixture of incredulity and despair that discussions regarding ways to put an end to PPI claims have broken down with no positive ‘outcome’ for those consumers miss-sold PPI.
That was the despair.
It was reported that Natalie Ceeney, chief executive of the FOS, claimed last month that only 10% of customers ever sold a PPI policy had so far made a claim for compensation.
Ms Ceeney has criticised the banks for “demonising customers” and said the ombudsman would be hiring a further 1,000 staff in the next six months to help deal with PPI claims.
What is going on out there?
Whilst not doubting there has been miss-selling of the product, a whole industry of ambulance chasing CMC’s have long ago set up camp (quicker than the current Romanian model seen at the disused Hendon FC ground) to feed upon misfortune and with only 10% having claimed, it is clear now what the CMC sees as opportunity.
In January the FOS said it expected to see a 42% rise in new claims in the current financial year, driven by an unprecented number of PPI cases, which had “dramatically exceeded” their assumptions.
That would, if my math’s is correct take the figure to 14.2% of customers miss-sold a PPI policy.
The PPI issue and CMC’s has been a scourge to advisers and also it would seem the FOS. But with all this noise and massive marketing spend providing encouragement to claim, if only 10% of those ever ‘sold’ such policies have expressed discontent and made a claim, are we looking an industry attempt to now ‘groom’ claims from the remaining 90% that appear not to be troubled or simply do not care?
The latest estimates show that the total cost to banks for miss-selling PPI is likely to come to £25 billion, almost double the near-£13 billion banks have already put aside.
In a recent consultation paper, the FOS said consumers were currently referring more than 5,000 new PPI cases each week, and it expects to receive around 250,000 new cases by the end of the current financial year (2012/2013) – against a planning assumption of 165,000 cases.
These figures are simply staggering, how many are genuine is not certain (given that many claimants have not had any such policy at all) yet Britain’s biggest banks have already set aside over £12bn to compensate customers. Lloyds, who has the most customers of any UK bank, has earmarked £5.3bn for claims.
If Ms Ceeney is correct and only 10% of those ever sold a PPI policy have complained (although the sums and numbers involved are looking high) this is not a miss-selling scandal and it seems a little odd that an organisation so resource stretched should be seen spending time trying to encourage the 90% not apparently concerned, to complain.
Compensating consumers who are genuinely concerned with a demonstrably legitimate grievance is the correct thing to do, seeking out those that really do not care does not.
And that may be why the banks have decided enough is enough?