With little more than two weeks to go until the time-barring of new PPI claims comes into effect, firms and industry bodies within financial services are beginning to see the last-minute surge predicted months ago come to pass.
Earlier this year, the Official Receiver was given charge of making PPI claims on behalf of bankrupt individuals for the purpose of returning redress monies to creditors. Because the Official Receiver has been acting on behalf of potential claimants who may not have come forth of their own accord, there has been an incredible spike in the number of claims received. Huntswood has come to understand that some firms have received tens of thousands of new claims since June.
Complicating matters further is the fact that the Official Receiver has been able to skirt some of the requirements that typical PPI claimants have to abide by. The Finance & Leasing Association (FLA) notes that the FCA does not believe that the Official Receiver's standing to complain is dependent on it having “grounds, supported by evidence, to consider that the individual was dissatisfied with either the sale of PPI, or the PPI policy itself”.
There was initial concern that Official Receiver complaints might be handled more slowly or less effectively than customer-made complaints, or perhaps only after all others have been resolved on the assumption that they may be less time-critical.
In August, however, the FLA confirmed that it had been in discussion with firms around the development of a “consistent approach to handling these complaints on behalf of bankrupt customers.” Though it takes special care to note that each and every firm will be required to develop an approach appropriate to the scale of their operations, timelines and claim volumes, the FLA has also identified some common themes to firms’ approaches that could guide businesses yet to tackle their large caseload.
Treatment of enquiries
Some firms have already had bilateral conversations with the Official Receiver around how PPI enquiries should be handled. There are, of course, going to be special circumstances depending on the scale and volume of a firm’s PPI caseload that must be considered. In general, however, the FLA recommends that firms should:
- On receipt of data, investigate this in line with their existing PPI checking processes
- Not manipulate the data provided. Firms will not be responsible for data provided in unworkable formats – The Official Receiver thus has a responsibility to ensure that complaints are made in the appropriate format
- Advice the Official Receiver if additional information (such as bankruptcy start / discharge dates) are required
- Be aware that the Official Receiver should not be submitting data on policies where PPI redress has already been payed out, or where the bankruptcy has been annulled
Treatment of complaints
There are two main ways that firms can deal with Official Receiver complaints:
- Auto-convert enquiries in line with their own PPI processes, resulting in either an auto-uphold, rejection or request for further information
- Process complete enquiries in the knowledge that additional information may be required to verify the identity of the customer and their purchase of PPI before converting these into complaints
Importantly, the FLA notes that firms will require a “formal expression of dissatisfaction” if the case is to be treated as a complaint under DISP. Unlike individuals, however, the Official Receiver will not send such a letter with each complaint. Instead, depending on circumstances and the manner in which firms decide that they will accept complaints, an “overarching outreach letter” (apparently already discussed and approved by the FCA) will be sent to the relevant firm alongside the bulk enquiries made.
Because there are likely to be very high volumes of new PPI complaints coming via the Official Receiver, some businesses may be unable to provide a final response within the eight-week timeframe required by the DISP rules.
If this is the case, the firm can send a single "holding response letter" to the Official Receiver explaining why it has been unable to respond to the complaints in this time and when it expects to be able to.
Considerations for firms
It is now clear that there is going to be plenty of ‘spill over’ after the PPI time-bar. Firms that have received Official Receiver complaints, or still expect to receive any, should ensure that they have appropriate resource on hand to deal with the potential influx.
Firms hoping to wind down their PPI operations in September should expect, instead, to have them up and running until at least the end of the year. If Official Receiver complaints are already expected to take over eight weeks to resolve, then firms should be prepared to keep working at this project for some time yet.
The Official Receiver itself has said that it is pleased with the level of response to the redress process so far, but will continue sending hardcopy complaint letters to those firms yet to take action. Firms yet to engage with the Official Receiver should expect these to keep on coming until the time-bar and, depending on the regulator’s decision after this point, even beyond.