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Payment Protection Insurance – Warnings of a Pay Out Deadline.

Payment Protection Insurance – Warnings of a Pay Out Deadline

The Confederation of British Industry boss John Cridland has called for a Payment Protection Insurance (PPI) pay out deadline.  The Confederation, which claim to be the ‘Voice of Businesses’, is the UK’s top business lobbying organisation. Writing in The Times Mr Cridland said that the level of publicity which has surrounded PPI claims means that everyone who may have been mis-sold the insurance will know about the opportunity to claim whatever money they may be entitled to. Such a move is likely to be supported by the Financial Services Authority (FSA) which has declared that the point in which all consumers know about mis-selling of PPI has now been reached.  From November 2012, Lloyds has paid out a staggering £5.3 Billion in compensation, Barclays £2.2 Billion, RBS £1.7 Billion and HSBC £1.3 Billion.

A Which?  survey has revealed that staff at Britain’s five biggest banks still feel under pressure to sell to customers, despite the incentive schemes which fuelled the mis-selling scandal of the past being removed. Interviews with more than 550 frontline staff revealed that, despite the banks paying billions of pounds in compensation to consumers for wrongly selling insurance and investment products, nearly half of those employed in a sales role felt they were expected to push products, regardless of whether they were appropriate to the customer. Over a third of those questioned said they were uncomfortable with the level of pressure they were put under by their employer.

Which? Boss Peter Vicary-Smith said: “Senior bankers say the culture is changing, but this shows it isn’t filtering through to staff on the front line who remain under pressure to put sales before service.”

This claim is further backed up by other findings from the survey. A third of customers interviewed for the poll said they had to refuse a product or service more than once the last time they spoke to the bank

As the PPI scandal rolls on however, it is unlikely that the public will stop applying for compensation. The totally pay out for all banks for reclaimed PPI is likely to rise further as millions of past customers continue to lodge claims in the hope of receiving a payment, which currently averages £2,750-per-claim. The Royal Bank of Scotland has set aside a further £400 million to pay their compensation.

The Real Cost of PPI

How much have they paid out?

The consumer’s association Which? added up the figures from the banks’ own publications and puts the cost so far at £12.96bn.

This includes the cost to the banks of administering the repayment process. Lloyds bank, for example, employs 1000 people just for PPI purposes.

How many people have been affected?

·         About 16 million PPI policies have been sold since 2005.

·         Some people would have had been sold more than one policy.

·         Some of the policies of course will have been sold validly, with the borrowers making valid claims too.

·         Millions of people have decided that they have grounds for making a complaint and demanding compensation.

How much more money is at stake?

·         In 2010 the FSA calculated that if 20% of PPI purchasers were compensated, then about 2.75 million people would be paid around £2.7 billion. Around £1000 per person.

With £12.96 billion now being set aside, and a payouts now averaging £2,750 per person, around 4.7 million people have been, or will soon be, compensated. 






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