The Financial Conduct Authority (FCA) has finally decided to put an end to the most scandalous finance product in the UK called the Payment Protection Insurance (PPI). The authorities have imposed a deadline of August 29, 2019 to reclaim the mis-sold PPI compensation.

To alert the people of the UK about the imposed deadline, the FCA has launched an ad campaign that started in the last month. Moreover, the banks are said to have paid out over £27 billion to the PPI mis-selling victims in the last six and a half years.

The deadline is said to be a relief for banks as they will finally be able to resume their daily business operations. The banks no longer need to worry about the PPI claims or add more money to the provisions pot.

Over the years, the PPI mis-selling scandal has not only damaged the financial conditions of the banks but has also destroyed their reputation in the eyes of the people. About 55 per cent of the people in the UK do not trust British banks to work in their favour. These statistics can lead to various problems as most of the UK’s small businesses look up to the banks to take care of their money.

Ever since the PPI deadline has been announced, there is a noticeable increase in the amount of complaints. However, it is still too early to decide whether the imposition of deadline will increase the number of complaints, especially as the deadline approaches. However, most banks and claim management companies believe that the number of complaints is bound to increase as the FCA’s ad campaign has started. Moreover, the banks are preparing themselves for the PPI claims and are said to have set aside an estimated amount of money for it.

If the PPI deadline awareness campaign started by the FCA does its job, the remaining people that owe PPI claims should be encouraged to reclaim their rightful money from the banks. Now that even the claim management companies are offering their clients with PPI claims with no win no fee and free PPI check policies, there are very less reasons for the people of the UK to hold back from making a claim.

Thanks to the Plevin ruling, there are new rules imposed for making PPI claims. These rules are even applicable for people whose claims were previously rejected. Under the Plevin rule, if the PPI policy was sold to you with your consent and the banks gained commission over 50 per cent, they owe you a refund as the amount of commission was not made clear at the time of purchase.

However, there is another reason why the banks are expecting an increase in the PPI claim complaints over the next two years. Now that the FCA’s ad campaign has started which means more promotion, there are now more ways to claim and a finite amount of time to do so. These factors are bound to give the banks a headache until the deadline terminates.

Usually a claim takes up to six months to process. However, by the first half of 2018, we will be able to figure out if the deadline is indeed encouraging people to make a claim or not.

People and the businesses of UK need banks that they can trust. But the trust levels among the consumers and the banks seem to have gone down majorly because of the PPI scandal.

The main problem is the number of banks involved in the PPI scandal. If people try to avoid dealing with one high street bank because of its PPI mis-selling history and try another, chances are the other bank is likely to have been involved too.

If you go to see, consumers that have received a four figure amount in compensation had a number of accounts with their former bank. However, these are the same consumers that do not have accounts in the same bank anymore. The major reason being the distrust among the consumers regarding their banks and this has forced them to go elsewhere.

Have the banks learnt their lesson?

It is difficult to say that the banks have learnt their lesson. As a matter of fact, there are rumours of various other finance products turning into the next PPI scandal such as car finance.

However, if you note the amount of money that was given out during the PPI scandal, chances are that the banks will tread with caution. As of now, the FCA is watching the banks closely to see how they respond to the PPI complaints before the deadline.