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PPI Claims: What Lenders and Consumers Need to Know

Payday lenders at risk of paying out on big claims.

Recently, payday loans giant Wonga went into administration after years of profit losses. The news emerged after a combination of a steep increase in payday loans claims, which have resulted in much concern for many loans companies, and stricter rules on the industry which were implemented by the Financial Conduct Authority (FCA) in 2014.

Payday loans

PPI coming to a halt

This rapid rise in claims for payday loans also comes at a time when PPI claims are coming to a stop. The FCA officially set a cut-off date for customers to contact their banks about claims. This date is the 29th of August 2019. Up to now, banks have reportedly been collectively paying out over £32billion to customers for mis-sold PPI. As the claims of PPI draw to a halt, many people are saying that payday loans are becoming the ‘new PPI’ in terms of a surge in claim. This is a change which may result in a major shift in the claims market.

What changes will there be for claims companies?

The number of mis-sold PPI which have been reported started a large scale scandal and many new PPI claims companies came onto the scene as a result. For customers of PPI, it was very unfortunate that some companies have been less trustworthy than others were. Consumers found that they were bombarded with text messages, cold calls and ultimately, hefty upfront fees. These fees however, were never returned. Consequently, the PPI industry gained a terrible reputation, similar to what is happening now with payday loans in the wake of Wonga going under. This is despite the presence of trustworthy companies being active in the industry and charge customers a low fee.

New regulations which were introduced by the FCA as well as an interim fee cap means that any remaining PPI claim companies are operating more fairly, especially in giving consumers a transparent view on their claim. Four months before the date of the 2019 deadline, it has been reported that the FCA will actually be taking over the authorisation and the regulation of all of these companies in full.

Filing deadline for PPI claims looming

The deadline is now less than a year away and due to this, PPI claim companies are likely to be looking for a new chapter in what they are convert to in order to keep capitalising. It seems as through the payday loans industry would fit the bill perfectly for this, considering the recent collapse of Wonga and other lending companies which are struggling to stay afloat. There seems to be a big enough market for payday loans claims, especially now that people are becoming far more aware that they have the option to apply for compensation for a payday loan or bad credit loan – something that may not have been aware to them before the liquidation of Wonga.

Those who believe they were mis-sold loans may be eligible for a refund of up to £500. This is on the basis that they can prove that they were given a loan without sufficient affordability checks, such as being unemployed, on benefits, already with a number of existing loans or very poor credit histories.

About author

Ivan Widjaya
Ivan Widjaya 3583 posts

Ivan Widjaya is the Owner/Editor of Noobpreneur.com, as well as several other blogs. He is a business blogger, web publisher and content marketer for SMEs.

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