Savings and lifestyle, Investment

Calculating compensation correctly. The real cost of being overcharged

Jonathan Punter
Jonathan Punter Chief Executive

Probably the UK’s biggest mis-selling case of all time – PPI – draws to a close next August.

Those who have claimed compensation after being flogged useless insurance alongside various mortgages, loans and credit cards have been paid £32 billion since 2005.

The deadline for any further claims is August 29th 2019 but will it draw the line under industrial-scale sharp practice?

You might have seen the Financial Conduct Authority adverts, featuring Arnold Schwarzenegger’s animated head – just the image to nudge you to review contracts taken out for various financial products over the years as the clock ticks down…

Perhaps ad land saw The Terminator as a metaphor for something being, well, terminated. I tend to liken its remorseless advance to a process that promises to go on and on.

PPI was triggered by a super-complaint from the Citizens’ Advice Bureau.  The CAB’s research laid the legal foundations to this gigantic compensation scheme.

So, we should take note when the CAB makes another super-complaint. It has found systemic evidence of further overcharging in something we have all come across.

If you have forgotten (or just couldn’t be bothered) to shop around when renewing your broadband and mobile contract and then found yourself clobbered with a more expensive deal, you’re not alone.

Add in mortgages and cash savings and home insurance and the team at CAB estimates £4.1bn a year is being slipped out of our pockets in these five markets as the price of staying put.

That doesn’t match anyone’s definition of repaying “loyalty”. The next stop is a response from the Competition and Markets Authority before the end of 2018 this could be followed by a host of legal actions and the possible birth of another compensation scheme.

The Financial Conduct Authority has already launched an investigation into the price of customer loyalty in the motor insurance and home insurance markets.

Why have I alighted on this? Because someone, somewhere has to unpick millions of transactions, terms and conditions and agreements to work out who is owed what.

PSG has evolved and thrived over the last 30 years by marrying technology – emerging and established – to the needs of its clients.

Punter Southall Analytics is the latest expression of what’s always been a strategic direction. It was the transition from mainframe to PC’s which opened the actuarial and investment market to fresh competition back in the 80s.

The digital economy is now established. You’ll have heard of globe-straddling social media companies and AI corporations gathering, analysing and storing billions of bytes of data of all kind.

From working out how you vote and what you buy to diagnosing cancer in seconds, this online revolution will transform further our lives. Some say, revolutionise.

And, despite the predictable, hysterical headlines, sometimes, it will be for the better.

One way we’ve harnessed this technology is to help organisations re-claim what they are owed by working out how much they’ve been overcharged.

Moving that capability from the corporate world to consumers is not straightforward by any means, but it is entirely achievable through the application of the same level of rigour and process, just at a greater scale and with a greater level of automation in order to reduce cost.

This is our field. We are already digging into potential over-charging across other sectors and are exploring how our forensic approach can help everyone from pension scheme trustees to individual investors.

PPI will have run for 14 years by the time the shutters come down on claims. We’ve already built up a body of work in approaching how to dissect industrial-scale overcharging right down to what it means for individual customers.

What PPI started will, we predict, be extended across every aspect of macro-billing and services sold by corporations to millions. AI is central to this but know-how is the key to turning it into reality.

We’ve got a keen interest in how this story will develop and anticipate being able to write our own chapter. A blog seems as good a place as any to make a start.