Millions of PPI compensation could go unclaimed as consumers still face difficult claims process
A Which? investigation reveals that the PPI claims process of some banks could be deterring people from claiming back the millions still owed from the mis-selling scandal, as one in five finds the process difficult.
When the Financial Conduct Authority (FCA) announced its August 2019 deadline for PPI complaints it also tasked firms with ensuring that claims were quick and easy for consumers to make. However, Which? looked into the process across eight banks and found practices that could discourage claimants from lodging a claim as one in five (18%) said their bank was difficult to deal with.
For instance, Lloyds Banking Group was found to send complainants a 12 page questionnaire requesting historic details that many consumers might have forgotten, which risks putting people off making a valid claim. Santander brands – including Abbey National and Alliance & Leicester – were also likely to ask for extra details via lengthy forms. While it’s not unusual or incorrect for banks to request more information – such requests are often unnecessary as most complaints can be settled by asking customers for only the critical pieces of information, online or over the phone, without any paperwork at all. For instance, Which?’s tool has seen successful applicants claiming back thousands with just the basic information necessary.
Lloyds also stipulates a 14 day deadline to return the forms before closing the claimant’s case, which suggests that failure to complete the forms would result in the complaint being dropped. Both banking groups were rated difficult or very difficult to deal with by over one in five customers (Lloyds 21%, Santander 22%).
Which? is also concerned that consumers faced with a difficult process might be more likely to use costly Claims Management Companies (CMCs), which can retain up to a third of any compensation paid out, costing consumers hundreds, even thousands per claim. In contrast, Which?’s own PPI tool – launched to ensure consumers can lodge claims easily and free of charge – has seen people earning £2,600 per claim on average and retaining every penny.
Monthly compensation for mis-sold PPI reached a high of £415.8m in January 2018, bringing the total cost of the scandal to £30bn so far. But, the biggest banks still have billions set aside for future PPI claims and Which? is keen to ensure anyone who might have been mis-sold PPI is not put off from claiming.
While Which? unearthed some examples of lengthy forms and questionnaires, consumers reported a smoother process with some banks – as Barclays and Royal Bank of Scotland were the least likely to send out questionnaires and had the highest percentage of customers rating them as fairly or very easy to deal with, both on 63%.
Harry Rose, Which? Money Editor, said:
“The banking industry still has a long way to go to restore customers’ trust following the PPI scandal. So it’s concerning that we’re still seeing lengthy claims forms and practices that could deter people from claiming back the money rightly owed to them.
“Consumers are receiving £2,600 compensation on average via our online tool. We want to encourage many more to do so, avoiding using costly claims management companies which can charge a third of any claim.
“As the FCA’s August 2019 deadline for complaints approaches, we want to see firms working with their customers to make the claims journey as simple as possible, encouraging and supporting claimants to ensure that no-one misses out.”
Notes to editors
*In February and March 2018, Which? surveyed 1,743 PPI complainants who first lodged a mis-selling claim via the free Which? PPI tool. Respondents were surveyed online at least four weeks after using the tool, which instantly submits complaints to the relevant form.
*Following our research, Santander has pledged to continue to work with Which? to ensure that consumers are clearly informed that their complaint will be investigated regardless of whether they have the full details requested in the questionnaire or not.
Which?’s free PPI tool can be found here: https://www.which.co.uk/consumer-rights/letter/letter-to-reclaim-ppi-for-free
The full list of banks is as follows: Alliance and Leicester, Barclays, First Direct, HFC Bank, John Lewis Bank, M&S Bank, Nationwide, NatWest, Royal Bank of Scotland, Santander, Ulster Bank, Bank of Scotland, Black Horse, Halifax, Lloyds Bank