With the constant blizzard of emails, text messages and cold calls from the claims management companies, not to mention the barrage of television and newspaper advertising they generate, it seems scarcely believable that there is a soul in the land who has not heard of the Payment Protection Insurance (PPI) mis-selling scandal.
According to the Financial Conduct Authority (FCA), however, many millions of Britons may still be unaware that they are entitled to compensation for being mis-sold PPI.
That is why the UK’s leading financial regulator has today launched a £42m campaign, fronted by Arnold Schwarzenegger, aimed at “cutting through the noise”, in its words.
Video: Watch: Arnie’s rallying cry on PPI
To date, some £27.4bn has been paid by the banks and building societies in compensation to those who were mis-sold the policies, which were mass-marketed largely between 1990 and 2010.
That sounds a lot – but, the regulator says, only covers fewer than half of the 60 million or so policies that were sold alongside bank loans, mortgages, credit cards and store cards.
Should the FCA’s campaign succeed, the banks will face an avalanche of further compensation claims. They have so far set aside some £37bn or so to cover pay-outs, so potentially could be facing higher costs.
However, to accompany this campaign, the FCA has also announced a deadline in which those mis-sold have in which to launch a claim for compensation.
Video: Regulator’s best way to make a PPI claim
This is something that the banks have been urging for a while. They have argued that, by the time the deadline comes into force on 29 August 2019, those claiming to have been mis-sold products will have had more than eight years in which to request compensation.
The deadline has angered the claims management firms that have grown rich on the PPI mis-selling scandal. One of them has even launched a legal challenge to the FCA’s decision to impose a deadline.
Many Britons, heartily tired of the claims firms, will welcome it. The trouble is that these firms are unlikely to pack up and go away. They are likely to alight on another cause from which they can make a profit.
One of the burgeoning areas, mined profitably by companies who in the last decade made a decent living from promoting whiplash claims, is encouraging customers of tour operators to claim that they fell ill on their package holiday.
One of the lasting legacies of the PPI scandal, and not for the better, is the way it has fostered and accelerated the growth of a US-style compensation culture in Britain.
Yet there are also some positives. One is that the banks have been chastened. The sheer scale of the pay-outs they have had to make has made all of them think carefully about how they sell products to, and interact with, their customers.
And perhaps the biggest positive of all is that, since 2011, PPI pay-outs have succeeded in putting money in the pockets of ordinary Britons during a period in which, for the most part, average earnings have failed to grow at the same pace as the cost of living. It’s why it has been referred to as ‘people’s quantitative easing’.
If the FCA campaign succeeds, the pay-outs will be rolling in for some time to come.