UK’s Compensation Claims Industry Worth £400 Million Per Year
The value of compensation claims is around £400 million per year, according to statistics from the Financial Conduct Authority (FCA) in the last year.
The majority of claims fall under life and pension (£157 million) and general insurance provision (£158 million), followed by investments, general finance and insurance.
Compensation claims can be made to customers, individuals or companies under the failure of providing a good or service.
Whilst personal accident and injuries continue to be the most heavily advertised on TV, the last few years has seen a surge in interest in Payment Protection Insurance, known by most as PPI.
How do you make a compensation claim?
Compensation claims can usually be made directly with the provider of the good or service and assuming the company is regulated, they have a legal obligation to respond. In fact, the FCA outlines how you can request compensation from a company in 7 steps.
This typically involves providing any physical proof and documents of the product you purchased and any supplementary information that supports your claim.
For those unfamiliar with the process of claiming compensation or eager to leave it to a professional may use a claims management company (CMC) – who are sometimes helpful but can also charge a fee for doing something that the individual can often do themselves.
In fact, the advertising for PPI claims from CMCs was so intense, it forced the UK’s regulatory to put a deadline in place which encouraged all potential victims to come forward and make a claim.
When the PPI deadline arrived in August 2019, many claims management companies turned their attention to the high cost payday lending industry.
Millions of UK customers were able to reclaim on mis-sold loans and any interest paid, usually due to a lack of checks and affordability measures. The average customer was able to claim £500 to £1,000 and the result has seen some of the UK’s largest lenders fall into administration including Wonga, Quickquid and The Money Shop.
The number of lenders offering high cost or payday lenders has decreased from 80 companies in 2015 to under 15 left in the market, with more reliable loan companies shifting to long term and guarantor products.
Later this year, there is the possibility that claims will be available in other similar loan industries. Some lenders have already stated on their websites that they are accepting refunds, this includes those looking to make a claim against Amigo Loans, PiggyBank or Lending Stream.
The earlier you claim, the better
There are a number of companies that admit to wrongdoing and have refund schemes in place, often incited by the regulatory.
However, there is also the risk that if you claim too late, there is no more funds available to pay your claim.
In the case of Wonga, it was announced today that they will be giving 4% of the claims total to around 400,000 ex-customers.
Whilst this is merely a fraction for people that were charged 4,000% worth of interest, those that claimed early were able to receive full amounts with a father or two claiming back £20,000 in fees.