10 Nov 2017 | Consultancy | News
PPI, or Payment Protection Insurance, was mis-sold to around 34 million policyholders in the UK. In 2011, it was ruled that claims could be made to get the money back.
A large industry has grown up around the claiming of PPI, so much so that it has almost become a by-word for cold calls. More than £40 billion in compensation has been paid out since 2011 to those unlucky – or now, lucky – enough to have it.
While many claims have not yet gone through, and still others have been processed incorrectly, spawning more, the window for claiming PPI is closing. After August 2019, the industry will need a new outlet.
The Death of PPI
It’s clear that there is a huge market for the ‘no win, no fee’ companies helping customers with their claims. Taking a percentage of the reward, they help people navigate the claim system after contacting them through cold calls, emails, texts, and letters.
Around 3-400 claims have been made every month since mid-2012 when the initial surge died down. Many of the people who are still claiming, or have yet to claim, are those who would have been unable to claim on their own. Many were unaware that they were eligible for compensation until they started the claims process, meaning that there may well be a large number of customers who never manage to put their claims through at all.
But when the deadline comes, the jig will be up for the PPI claims management companies. If they do not find a new area of claims to handle, they will be out of work. The good news, from their point of view, is that a replacement may just be on the horizon.
A New Era
The next big thing for these claims companies could be GPDR class actions. It stands for General Data Protection Regulation and is set to be the new tripwire for companies using big data.
Coming into force in May 2018, the legislation will put strict requirements on the way that personal data is used by businesses. The way that it is stored, processed and used will all be under the microscope. Companies who don’t obey the new rules will be open to compensation claims.
These claims may come either from consumers or consumer groups, and it is already thought that they could rise to a scale similar to that of the PPI claims.
GPDR fines could reach as much as €20 million or up to 4% of the annual worldwide turnover – whichever of these is the greater. This could be a serious risk for companies that do not comply, and of course, a serious boon for any customers affected.
With a class action suit, it’s notoriously difficult for an individual to try and rally a case to present. This means the companies that do it on behalf of a larger number of clients will be filling an important niche in the market.
With more than 10 million people having pursued PPI claims so far, GPDR class action claims could be the way forward for claim companies. They will have to adjust to a new type of process and seek legal advice on the right way to arrange suits.
With larger companies, only a very small percentage of customers need ever make a claim to gain huge amounts in compensation, and with fees applied, claims companies could easily corner this market for big profits.
All that remains to be seen is who will adjust quickly enough to grab clients in the first big wave of uptakes, with GPDR coming in before PPI claims reach their deadline.