PPI Compensation Bill Reaches £18 Billion

The latest reports that banks and lenders have increased the funds available for repaying mis sold PPI to over £18billion – a truly staggering amount – simply serve to confirm that this is a scandal that has not gone away. Indeed, many more people are making claims as the public becomes increasingly aware of the right to get back the fees on mis sold policies. The Financial Ombudsman, which deals with disputes between lenders and consumers, has reported a slight decrease in the numbers of people claiming, but still handles over 2000 cases each day.

Biggest Scandal of All Time

The payment protection insurance (PPI) scandal has been called the worst of all time to hit the UK finance industry, and rightly so: over a course of many years, several million people were sold policies that were either of no use to them or that they did not want, and a recent ruling by the High Court means all fees on so-called mis-sold PPI policies must be repaid to the customer. With the three biggest banks in the UK – Lloyds Banking Group, RBS and Barclays – heading the list of names involved it is clear that mis-selling has been widespread throughout the industry.

 

Calculating the Payment

The average PPI payment is currently around £3000, but there have been many that were considerably more; the amount in each case is determined by the individual circumstances, as well as the size and type of credit agreement concerned. The added awareness that has come with all the publicity has led to many people using websites with an online PPI calculator, such as PPI Claims Advice Line to get an idea of how much they may be awarded. This is a convenient way of an advance warning, but must only be taken as an estimate.

An Ongoing Saga

One notable aspect of the scandal has been a fall in confidence on the part of the consumer; the man on the street no longer trusts the financial industry after discovering it has been selling products outsidethe regulations. It remains to be seen how – or if – this can be restored any time in the near future.

Is the PPI scandal past its peak?

PPI scandal, the biggest ever scandal to hit the UK financial sector basically arose from the fact that the PPI policies were mis-sold. The financial institutions and banks which provided the PPI did not give out the accurate and complete information about the policy to the customers. The misleading information only increased the number of complaints that the customers had against PPI as, following the recession, 85% of people who tried to make use of the policy were declined as they were ineligible to make a claim.

The number of people claiming back PPI increased ever since the Bankers’ Association decided not to appeal against the High Court ruling against the mis-selling of the PPI. However, the latest figures released show that the number of claims that the banks and financial institutions are getting has reduced. The FSA was scrapped on April 1, 2013 and in its place the FCA or Financial Conduct Authority now handles all complaints against the PPI. The FCA also releases figures on the complaints that are received by specific bodies in the financial sector.

As per the figures released by the FCA, there has been a slight decline in the number of PPI mis-selling scandal in the second half of the year 2012. During the second half, there were a total of 2.1 million complaints that were received as compared to 2.2 million complaints that were received during the first half of the same year. 

The figures, however, also revealed the fact that the number of complaints received regarding PPI was the largest in the sector. An estimated 63 % of all complaints received were against payment insurance. A number of institutions have also been fined for failing to meet the PPI claims. In addition, banks are now pushing for a deadline to be applied to the PPI claims.

Thus, it seems that the worst is over and that the PPI scandal is past its peak.