Barclays has set aside a further £600 million to cover payments for mis-sold PPI compensation claims. This takes the total amount set aside by Barclays to somewhere in the region of £2.6 billion. The bank stated: ‘Based on claims experience to date and anticipated future volumes, the provision represents Barclay’s best estimate of expected future PPI redress payments and claims management costs.’ This follows on from news that two of the senior executives, Chris Lucas and Mark Harding are to resign from the bank.
However consumer group, Which? has estimated that the compensation fund set aside by lenders could run out by the end of this year – based on the pace that claims were made in the first half of 2012, after a record number of mis-sold Payment Protection Insurance (PPI) claims were made between October and December last year.
The total averaged out to around 11,000 complaints a week, and the Financial Ombudsman Service said it was double the rate seen over the three months previous to that. In nearly two-thirds of all cases, the ombudsman found in the customer’s favour, with banks paying out on average over £530m a month last year and the typical payment being close to £3000.
Payment protection insurance was sold alongside loans, mortgages and credit card policies. It was designed to cover debt repayments in the event of illness or redundancy, however it is not suitable for everyone. You may have been mis-sold PPI if at the time of taking out the policy you were self-employed or had an existing medical illness. You may also have found PPI was mis-sold if you didn’t ask for it, but found it was still sold to you alongside the policy without your consent.
Letters were sent of out millions of customers early last year, explaining that they may have been mis-sold payment protection insurance. The Financial Services Authority (FSA) ordered that these letters had to be written in clear, jargon-free language. It may be partially due to these letters that the number of claims has risen so sharply in the previous year, as more people are becoming aware on how the policy was mis-sold. Over 2.5 million people have already been paid compensation and that number can only rise in the following months.
Despite this, it is likely that there are many more people who are still left unaware that they may have been mis-sold PPI at some point and who are missing out on their opportunity to claim compensation for the mis-selling. Whilst banks want a cut-off date of April 2014 for any PPI claims, the FSA said it will not set a cut-off point without a full public enquiry.
This article was posted on behalf of Claims Advisory Group.