High street banks face the prospect of another stampede of PPI mis-selling claims with the City watchdog poised to launch a £42m marketing campaign to promote the fact that consumers still have two years before the final deadline for claims.
The Financial Conduct Authority recently revealed that payouts totalled £260m in May alone, the highest monthly value since June 2016. Since 2011, £27.4bn has been paid out to customers. However, it is estimated that only one in four PPI claims has been lodged so far.
There are 1,610 companies registered to handle PPI mis-selling, although many in the direct marketing industry believe that their use of cold-calling has been detrimental to the sector. The issue has been one of the biggest drivers of complaints to the Information Commissioner’s Office for years and has been branded by some as “the final nail in the telemarketing coffin”.
The marketing push – which is being handled by M&C Saatchi and Manning Gottlieb OMD – is likely to trigger thousands more claims, potentially adding billions to payouts. Banks have set aside around £40bn to deal with PPI claims, with both Lloyds and Barclays last month increasing their provisions by £1bn and £700m respectively.
The £42.2m marketing push, which is being funded by lenders, is due to kick off on August 29.
The Professional Financial Claims Association has calculated that nearly £50bn of PPI was mis-sold and that, because of interest, the cost to banks would be up to £100bn if it was all claimed. This would mean that less than 30% has so far been paid out.
PFCA chairman Nick Baxter told City AM: “We’re nowhere near through this. The big problem for consumers is that there is a time bar starting to tick. If it was all done properly and banks had to contact customers they’d sold things to… the bill would be nearer £100bn.”
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