Banks have been warned not to stifle legitimate legal cases ahead of a fresh wave of PPI claims which may cost high street lenders billions of pounds.
The latest round of Payment Protection Insurance (PPI) claims comes after it emerged banks and credit card firms secretly charged customers commissions of up to 95 percent for more than 10 years.
As a first step, PPI claimants who want to recoup their money have to make a Data Subject Access Request (DSAR) to find out how much undisclosed commission was levied.
A powerful Parliamentary group of MPs have said these requests often take months or even years to answer.
High street banks have been accused of deliberately sitting on a huge backlog of DSARS, stopping customers from claiming the secret PPI commissions which shouldn’t have been levied.
A Supreme Court ruling in October has created an opportunity for PPI claims dating back beyond the usual six-year limitation period.
A letter to banks by MPs on the All Party Parliamentary Group (APPG) on Fair Business Banking says such delays may breach DSAR laws.
William Wragg MP, co-chair of the APPG on Fair Business Banking, said: “If it turns out banks are acting as a block to the proper legal process it would be a concern to us all.
“Whether the claim relates to PPI, swap mis-selling or any other matter, the legal process must not be stifled or delayed in any way.
“Any backlog of data subject access requests needs to be dealt with efficiently and effectively by the banks.”
The APPG’s letter states: “We are told there is now a backlog of thousands, even tens of thousands, of DSARs relating to PPI claims which have not been returned by the major banks.
“While some of this may be explained by legacy issues relating to Covid, there are real concerns that some banks may be deliberately delaying their responses to frustrate and stifle claims.”
The warning comes after leading law firm Harcus Parker launched a new group legal claim which aims to help millions of PPI customers recoup commissions secretly charged by banks and credit card firms.
More than 350,000 people have already signed up to see if they are eligible to join the no win, no fee group legal claim, according to Harcus Parker.
The first wave of PPI claims related to how the products were entirely inappropriate for the customers they were sold to and often placed on financial products without full permission.New claims relate to the secret commissions.
Legal judgements have ruled customers can claim 100 percent of the PPI cost back because the commission levels were so unfair.
It is estimated such claims could cost banks a further £18billion in compensation, on top of roughly £40bn paid out to date through PPI claims.
Damon Parker, senior partner at Harcus Parker, claimed: “Banks are playing fast and loose with the law. In many cases they either require or request that customers make DSARs before launching their claims.
“Then they just sit on the requests, for months, even years. It is an outrageous abuse of the system and individuals’ rights.”
He said Harcus Parker’s group legal claim will help solve the problem and force banks to answer DSARs in a timely manner, even though doing so shouldn’t be necessary.
The law firms said banks have previously had issues processing PPI claims, stating that in 2019 they blamed the deadline for mis-sold PPI claims to be made under the Financial Ombudsman Service scheme for the backlog.
More recently they argued COVID-19 and staffing issues brought on by lockdowns had led to delays, according to Harcus Parker.
Mr Parker claimed there is real concern such delays could be a deliberate ploy. He said: “Banks are playing every trick in the book when it comes to defending these claims. Delays in responding to DSARs is just one chapter.
“The other issue we see all the time is loading huge costs onto what are relatively modest claims when pursued individually. This is just one of the reasons why a group legal claim is so necessary. There is real power in numbers.”
As part of the group legal claim, Harcus Parker is asking the court to make the DSAR process simpler and to order banks to hand over information in one month.
Alex Neill, co-founder of Consumer Voice, said: “This appears to be yet another damning chapter in the PPI scandal. The banks have sought to delay and deny access to justice to the customers they ripped off for far too long.
“This group action should mean the banks cannot continue to avoid their fate and customers will be able to hold them to account. Banks must pay back what they owe without further delay or excessive costs.”
Anyone who wants to apply to join the group legal action should visit ppiglo.com
