PPI mis-selling scandal hits bank profits hard

Financial industry rattled by compensation claims

by Luke Whitmore, 1st August 2011

The UK's main banks are expected to unveil a vast drop in profits in the wake of the mis-sold PPI scandal which recently rocked the financial world.

The mis-selling of PPI, or Payment Protection Insurance, was found to be widespread amongst lending institutions, with millions of customers having been sold policies that they did not want or that turned out to be inappropriate to their circumstances and not actually offer cover. A judicial review led to the decision that the banks were legally obliged to offer redress to wronged consumers, leading to billions of pounds being set aside as potential compensation.

However, as was expected, the necessity to pay out such vast sums has had a disastrous effect on the profitability of the banks involved, with many now being set to release new figures showing the effects of the mis-sold PPI situation.

Lloyds Banking Group, for example, is expected to announce pre-tax losses for the first half of the year reaching a potential £2.9 billion, a sum which will push their accounts back into the red. Redundancies are expected to be announced throughout the business at some point.

Likewise, HSBC has warned that they are to cut up to 30,000 jobs as a global restructuring of the bank leads them to withdraw branches from countries in which they are having difficulty making a profit, it was announced today.

Even where banks have succeeded in eking out a profit, many of them are seeing a great reduction compared to the profits from the first six months of 2010, with Barclays and RBS also expected to announce today that their profits have been severely hit by the necessity for mis-sold PPI payouts.

Despite these losses, consumers have been widely misled and ripped off by their banks, so it is only right that they should receive compensation for this.

If you have been the victim of PPI mis-selling, we can help you claim back PPI.

Claims Financial