COMMENT
The beginning of the end?
David Wylie asks whether the financial services sector can finally see claims chasing coming to an end There can’t be many industries that have been as badly impacted by claims chasing as financial services.
evaporate when it became apparent that the claims industry had no inten- tion of going away quietly. New areas of mis-selling such as subscription current accounts, short term credit, and point-of-sale finance were to be mined to provide new streams of income. "Claims chasers are an albatross that is im- possible for the industry to shake off. " Cleverly, many of the 1,500 firms that had grown fat on the claims business had ensured their clients included details of other financial products they had bought when they filled out their applications for PPI compensation.
Although changes to the law have slightly restricted the scope for such claims, still the Ombudsman regime remains there as a sort of ‘heads you win, tails they lose’ for claimants. Inves- tigated companies have had to pay a fixed admin fee irrespective of whether the claimant wins or loses. The result being that there is every incentive to pursue a dubious claim and firms are pushed to settle before referral to the Ombudsman. Anyone could be forgiven for thinking that claims chasers are destined to per- manently hang around financial servic- es. An albatross that is impossible for the industry to shake off. Well, thankfully, I think such pessimism is wrong. I believe we are witnessing the beginning of the end of claims chasing.
The total cost of PPI mis-selling is reck- oned to be £53 billion in the UK. To put it into perspective – that’s £900 for every man, woman and child in the country. The hit to the sector has helped suffo- cate bank profits for most of the past decade and the threat of compensation claims has loomed large on the horizon for every lender and intermediary. When a moratorium on PPI claims was introduced at the end of August 2019, the industry briefly breathed a sigh of relief, only for that relief to
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