Payment protection insurance (PPI) is sold alongside finance agreements and can pay for your mortgage, loan or credit card if you fall ill or lose your job. Over 20-30 years prior to 2006, banks became notorious for not fully explaining exactly what this policy covered or what it entailed when they sold it to their customers, meaning that a staggering number of people were mis-sold PPI. However, nowadays it’s possible to make a claim for compensation and even PPI Companies designed to help you. The UK’s four biggest banks – HSBC, Barclays, Lloyds and RBS -are spending billions paying out PPI claims and with the PPI scandal still continuing in 2018, it‘s still hitting the banks hard. Here’s what they’re paying out.
How to Make a Claim
You can use a PPI company, such as MoneyBack PPI, to help reclaim your money, however it’s important to note that you can also make a claim yourself free of charge. If, after your complaint, you are not happy with the bank’s response, you can take your case to the Financial Ombudsman Service (FOS). They can resolve disputes between customers and financial firms. The average amount that one can claim is £2000, however there are exceptions where people have received £65,000 and above.
Recent results have showed that Lloyds have paid out £460m in PPI compensation between April and June this year already. The deadline to make a PPI claim is 29th August 2019, so banks, such as Lloyds, are putting money aside to cover the compensation they need to pay out. However, it’s best not to leave this until the last moment to avoid a potential rush as the deadline draws closer.
In 2017, HSBC paid out £3.3billion to customers for PPI complaints since the scandal became apparent. They have received over 2 million complaints after having sold more than 5.4 million PPI policies. In February 2018 it was reported that HSBC had added an extra £840 million to its PPI compensation pot in 2017.
PPI claim charges, alongside legal issues in the US, have resulted in a 29% drop in profits for the first six months of 2018 for Barclays Bank. With £10.9bn being their total income for these six months, this isn’t great news for Barclays. However, despite this, the bank had the most profitable second quarter in more than three years.
The Royal Bank of Scotland (RBS) also set aside money in order to fund the compensation for their customers involved in the PPI scandal. In 2017 the bank made a provision for an additional £175m of PPI claims, due to an increasing volume of customers complaining.
How the FCA Are Helping
The Financial Conduct Authority (FCA) protects consumers to ensure they get a fair deal with any financial service in the UK. In April 2018, it was reported by the FCA that £30 billion had been paid out so far for mis-sold PPI to customers. As a result, a deadline for 2019 has been put in place to encourage customers to make a claim and help protect banks and institutions from a never-ending slew of claims. In the second half of 2017, it was reported by the FCA that 1.55 million people complained to their bank about mis-sold PPI.
The scandal has been alight for many years now and the banks have rightly suffered. 2019 will hopefully bring an end to it and the banks cannot wait.