The Professional Financial Claims Association (PFCA), a trade body founded by five financial claims management companies, has highlighted the possible extent of mis-selling of payment protection insurance (PPI) linked to store cards.

PPI linked to store cards was often sold at the till by retail assistants without financial services experience. Firms also used the often seen tactic with PPI of pre-ticking a box, or some other method that required the customer to actively opt out of taking the insurance.

Store card finance was often provided by banks, with Santander and GE Capital Bank especially active in this market.

The Association believes that mis-selling of this type of insurance could date back as far as the 1980s, and that large numbers of customers are unaware they ever had the insurance.

Compensation payments for this form of insurance could be significant, as although the initial amount paid in premiums may be smaller than for other types of PPI, there could be significant sums in interest added to the payments, owing to the length of time that has elapsed since the plan was sold.

However, even if customers are alerted to the fact they may have had store card PPI, the claims process could be difficult. Insurance was not regulated by the Financial Conduct Authority (FCA) until 2005, and there is no automatic right for consumers to appeal rejected bank complaints from before this date to the Financial Ombudsman Service (FOS).

Nick Baxter, chairman of the PFCA, commented:

“Store cards are worse than the banks. There’s a perception that the PPI issue is largely done but the reality is we are nowhere near the end.”

It has been suggested that a claim dating back to before 2005 may have more chance of success if it is made to the PPI insurance provider, rather than to the finance provider. Insurance providers were still subject to a code of conduct – that of the General Insurance Standards Council (GISC) – prior to coming under statutory regulation, and the FOS will assess pre-2005 insurance complaints according to the GISC code. Commenting on this, Mr Baxter added:

“If financial services firms know a route where customers could pursue their claim, then it’s wrong morally to not make consumers aware of it. There is a route for people to get redress if they were sold before 2005, they just don’t know about it.”

Press reports suggest the FCA will make an announcement in the next few weeks regarding whether to impose a deadline on when a PPI claim can be made. This deadline is expected to be in 2018, set at two years after the date on which the FCA confirms the procedure to be followed. Despite some parties branding the deadline as ‘anti-consumer’, there is a widely held belief that it is time to draw a line under the long running PPI mis-selling saga that has forced banks and other financial firms to set aside £30 billion to pay compensation payments.

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.