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PPI: £10bn – cost of the biggest scandal ever
The endemic mis-selling of payment protection insurance is on course to be the costliest financial scandal in British financial history. The cost to the banks is approaching £10bn and rising. This week, HSBC said they will put up a further £340m and Royal Bank of Scotland £135m, following Lloyds, who increased their claims pot to £4.3bn last week. The five largest banks (HSBC, Lloyds, Barclays, RBS, and Santander) make up the bulk of this £10bn with a combined compensation fund of £8.8bn.
“The latest figures from the banks show that PPI is on course to become the biggest consumer financial scandal of all time, exceeding pensions mis-selling and the endowment mortgage scandal,” says Which? chief executive Peter Vicary-Smith.
By the end of May 2012, £4.8bn had been paid out by the banks for PPI claims, so there is still around £5bn to give back, but if you were mis-sold a policy, you need to know the best route for getting redress. “Increasing numbers of people are realising they may have been sold a PPI policy without their being aware of it, when they took out loans or credit cards. So it’s inevitable that banks will need to gear up to deal with more inquiries from people legitimately asking if they were sold PPI in this way or not,” says Natalie Ceeney, the chief ombudsman at the FOS.
PPI policies are designed to cover debt repayments for borrowers who suddenly lose income due to unemployment, illness or accident, and most are sold alongside personal loans, mortgages and credit cards. The scandal lay not in PPI itself, but in its expense and the irresponsible way that it was sold, with some banks pushing the product on people who would never have been able to make a claim (because they were self-employed or retired). Other providers failed to be upfront about exclusions, and shockingly, some customers were even forced to take PPI out, either being told that it was compulsory, or having it sneakily added without them realising.
05/08/2012 - Independant.co.uk