The tsunami of claims triggered by the PPI scandal continues to roll on. Meanwhile, another seismic financial mis-selling outrage may be gathering steam.
The UK financial sector continues to reel from the payment protection insurance (PPI) scandal that just seems to keep rumbling on. Until, that is, the Financial Conduct Authority slapped a deadline on claims relating to the mis-selling of various financial products in recent years.
That decision alone is prompting a wave of PPI claims until the proposed cut-off time of June 2019. Many firms handling the claims are resorting to specialised claims software to cut through the mountain of cases pouring in. But is another, similar financial scandal brewing? One that threatens to even eclipse that of the magnitude of PPI? In what has been called the “biggest mis-selling scandal of all time”, financial institutions around the country (notably banks) attached PPI policies to the likes of mortgages, loans and credit cards — and largely kept quiet about it.
Tens of millions of these policies were sold since 2001, with many customers unaware that they were paying extra for this facility designed to protect them if they lost their income due to illness, redundancy or death. To date, £25.8 billion has been paid out in PPI claims, many processed automatically by using claims management software. Banks estimate they will have to pay out around the same again before the claims period ends.
A Supreme Knock-Back for PPI
Bringing the entire issue to a head, the Supreme Court ruled in 2014 that when a lender did not disclose to a borrower at the time of a transaction that substantial commissions were due from PPI premiums, that rendered it unfair and in breach of the Consumer Credit Act 1974. The doors to multi-million-pound PPI claims payouts were open and they have yet to close.
Enter packaged bank accounts. These peculiarly named financial products are, however, exactly what they sound like: bank accounts stuffed with a whole range of added features. These can include such things as travel insurance, breakdown cover, attractive rates for overdrafts and loans, and even free mobile phone cover can be thrown in to make them seem more attractive. Banks were falling over themselves to get people signed up, and these products are still widely available at major banks today.
They’re not always advertised or marketed as packaged bank accounts. Instead, banks often use such consumer-friendly terminology as “premium”, “gold” or “reward” accounts. Sounds great, and innocuous, but the bite is in the hefty monthly fee attached to them that can add up to hundreds of pounds a year. But people are starting to complain in growing numbers.
A Mountain of Cases Requires Towering Claims Software
As the Financial Ombudsman Service (FOS) reports, some people didn’t even know they had such a thing as a packaged bank account, or that they weren’t given a choice when they opened it. Others felt they were pressured into taking one, while others said the bank told them they had to have a packaged account so they could get a credit card, loan or overdraft.
Such is the scale of the emerging problem of packaged bank accounts, complaints have soared by 100% in the past year. From March 2015 to March last year, the FOS dealt with more than 44,000 new complaints about the product; over 850 every week. Customers said they were mis-sold packaged bank accounts, had not given their consent, or had opened such accounts without knowing what they were.
It took time for people to become aware they had been mis-sold PPI. With the level of complaints now growing about packaged bank accounts, that would appear to be the case, too. Companies handling these claims are increasingly using claims management software to deal with them efficiently and accurately. Leading UK providers of claims software, including Logican, based in Manchester, say they are experiencing unprecedented demand for their products.
It appears that just as one financial scandal is finally wrapping up, another is being uncovered.