Over £5bn already set aside for wronged customers
by Luke Whitmore, 16th May 2011
The amount that banks will have to pay out in mis-sold PPI
compensation could turn out to be twice as much as the original
estimate made by the Financial Services Authority (FSA) and the
British Bankers' Association (BBA).
It was understood that, after the banks lost their court case
against new FSA rules which were to be applied retroactively on
mis-sold PPI cases, they would be forced to pay out a vast sum in
compensation to customers who had been unfairly sold the policies,
but it now seems that the initial calculations of just how much
this would cost the banking industry did not take into account the
true extent of the mis-selling which took place.
It had originally been suggested that the PPI mis-selling
scandal - in which millions of customers were sold unsuitable and
costly Payment Protection Insurance policies alongside loans,
mortgages and credit cards - could result in a compensation figure
of around £4.5bn.
But the sums set aside by just five high-street banks in
preparation have already exceeded £5bn, indicating that the FSA and
BBA may have vastly underestimated just how much money has been
drained from borrowers' finances by mis-sold PPI policies.
Lloyds, who - after their acquisition of HBOS in 2009 - hold
around 40% of PPI policies in the UK, have put aside £3.2bn to
cover potential mis-sold PPI payouts. Barclays has put together a
compensation fund of £1bn, RBS has made a provision of £850m and
HSBC has set aside £268m. Santander, who disagreed with the court
challenge over the FSA's rules, has already been making payouts to
wronged customers.
Extrapolation from these sums has established that mis-sold PPI
claims could easily cost the banking industry double the figure
which was initially posited, demonstrating just how many millions
of people are eligible to make a claim.
If you are one of the millions of people who have been a victim
of PPI mis-selling, we can help you claim PPI compensation quickly and
easily.
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Mr R Evans 11 Nov 2010