horwich farrelly

Waiting for the tsunami? PPI deadline is reached today

August, 29, 2019

Everyone will now be familiar with the Financial Conduct Authority’s (FCA) advertisement in which Arnold Schwarzenegger warned of the imminent deadline (today) for making a claim for mis-sold PPI. Equally familiar are similar advertisements by fee charging claims management companies (CMCs), which have seemingly been washing over us for months now. So, from tomorrow morning, will the tide go out and stay out or is this wishful thinking: remember King Cnut?

Large queue of people

The deadline for submitting PPI claims will be reached at 23:59 today.

CMCs are now under the regulation of the FCA and far more tightly controlled. Nevertheless, we foresee that after a short period of quiet water (while PPI claims are being run-off) the waves will come crashing in again. During the PPI ‘scandal’ CMCs have had time to hone their processes. As soon as they are ready to do so, they will undoubtedly turn their attention to a wide range of products, some already well tried and tested and some less well known.

The reforms to low value personal injury claims, due to come in in Spring 2020, will effectively remove the legal profession from a high volume of claims in which legal costs will no longer be recoverable by successful claimants. This is ideal territory for CMCs to offer their services, in return for a proportion of the damages recovered. This will encompass not only road traffic accidents but also most other form of minor personal injury claim, such as tripping and slipping.

Flight delay and holiday sickness claims are already big business for some firms of solicitors as well as for CMCs. As more of these fall into the Small Claims Track, where costs are not recoverable, more CMCs will inevitably view these as areas into which to expand

There must also be concern that as data breaches become more common, because of the far tighter requirements of GDPR and the Data Protection Act, we will see a rise in CMCs offering their services to recover compensation.

There is no doubt that CMCs offer ‘access to justice’ for those who either cannot or do not wish to handle these types of claim for themselves. The risks, however, are two-fold. First, CMCs must not be permitted to impose charges which are unreasonable and amount to exploitation of the more vulnerable members of society. Secondly, the regulators must be alert to the real possibility that fraudsters will see fresh opportunities to operate in at least some of these areas.

While the CMCs regroup in the post-PPI period, it is also time for insurers, bankers and others in the financial services market to ; to reinforce their defences; and ensure that when the waves break, they are on higher ground than before.

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