Customer compensation cuts into bank's finances
by Luke Whitmore, 5th August 2011
The Royal Bank of Scotland (RBS) has suffered a severe hit in
profits as a result of the mis-sold PPI debacle, in which millions
of customers were sold inappropriate loan cover by insurance
brokers eager to fill their own coffers at the expense of the
consumer.
PPI compensation, as well as Greek fiscal woes, has led to RBS
suffering an after-tax loss of £1.4bn in the first six months of
2011. £850 million of this sum was the money which had to be set
aside to cover the cost of recompense for mis-sold PPI claims, with
a further £733 million having taken the form of a loan to the Greek
government, which is unlikely to see any return for RBS.
RBS is 84% state-owned, meaning that honest taxpayers are forced
to bear the brunt of its crippling losses and short-sighted
investments.
The high street banks have been placed under a legal obligation
to offer redress to those customers who were mis-sold Payment
Protection Insurance, and, while good news for consumer rights, it
has proved to be less of a winner for the financial services
industry, with banks reporting that the compensation payouts, in
addition to other factors, have led to their profitability taking a
hammering.
PPI, or Payment Protection Insurance, is a form of loan
insurance which turned out to have been sold to a great many people
for whom the policies were not appropriate and would often not pay
out at all.
RBS is the latest bank to announce a drop in profit for the
first half of the year, with other banks, such as Barclays and
Lloyds, having recently announced the effect that compensation for
the PPI scandal has had on their funds. In total, billions of
pounds have been ringfenced by various financial and lending
institutions in order to ensure that they are able to pay out any
claims made by clients to whom they mis-sold PPI.
If you were mis-sold PPI, then we can help you claim PPI
compensation today.
Claims
Financial
Testimonial
"I just had to put pen to paper and write to say I'm more than delighted with my settlement that you won me back from my PPI I had with Lloyds TSB. The Claim Forms were simple to fill in. It was a breeze"
Mr R Evans 11 Nov 2010