Payment Protection Insurance (PPI) Claims Only 15% Why Pay More

Thousands of people have taken out Payment Protection Insurance (PPI) on their credit cards because they thought their application was more likely to be accepted if they did.

Approximately 9.8 million people have credit cards with PPI attached, according to a survey. Of these about 13 per cent (or 1.3 million) thought that buying the PPI was a condition of the sale or that it would boost their chances of receiving the credit card.

 PPI is sold alongside credit cards, loans, finance agreements and mortgages to cover repayments if people are off work because of illness or unemployment.

Obviously, what the banks didn’t say was that most of the time it didn’t cover you. Surprise Surprise

Self-employed urged to reclaim PPI premiums

Banks have had to pay out to thousands of customers, including many self-employed people, to whom it mis-sold payment protection insurance (PPI).

Policies, which were sold to the Self Employed, were often sold even though the Banks knew that the customer could not claim on the policy if sick or ill.

The High Street banks which all want the customers trust expect that this debacle will go away. Trust is not selling customers £2000 of Insurance knowing that they could not claim on the policy.

Paying back the customers money should not be enough; this is Fraud and no better or worse then the MP’S expenses claims.

 Lloyds banking group announced a £3.3 billion loss today. This was mainly due to the expected large payouts to customers who have been mis sold payment protection insurance.  Lloyds as well as other high street banks are reporting mind boggling losses because of the fiasco. The ongoing cost of this is likely to be spread over the next 3 years as over 20 million policy’s have been sold within the United Kingdom.

 It’s a big win for these customers as the FSA had decided to act and stop these banks from ripping the customer off.

 Barclays has said it will pay out compensation to everyone to whom it sold payment protection insurance and who made a complaint before 20 April 2011.Customers will be reimbursed the total value of all premiums plus 8% interest.The bank said the move would affect tens of thousands of customers, particularly those put on hold during a recent judicial review. It considered its move as fair to all its customers and would help to clear the back log of complaints which is thought to be quite long.

Barclays said it was the first bank to pay out PPI compensation on a “no-quibble” basis. It said its customers had waited long enough because of the long-running judicial review, and this would allow it to clear the backlog quickly and assess new cases more quickly.”We can confirm that we are contacting customers whose complaint was put on hold on or before 20 April with an offer to settle their complaint in full as a gesture of goodwill,” the bank said.

Separately, the FSA has given three banks – Barclays, Lloyds, and RBS – more time to deal with their huge backlogs of complaints and a flood of new complaints.As an indication of the scale of the problem, the Financial Ombudsman Service (FOS) revealed that since the start of April this year, it had received 40,000 new PPI complaints from people unhappy that their bank had turned down their original complaint.

Even the Banks who did not take on the regulator in the High Courts have taken a hit with the refunds for the
Mis selling of Payment Protection.

The UK arm of the bank – which includes the Abbey, Alliance and Leicester and Bradford and Bingley brands – saw pre-tax profits dip 3% to £1.2bn in the six months to June. This was mainly due to putting in a contingency in the accounts for the Mis selling scandal.

What with all the major banks setting aside billions of pounds this can only be taken as a firm victory for the Regulators.

Santander was second, behind Barclays, in the list of most complained-about financial institutions during the second half of 2010.

Eagle Claims reports that the major banks may have to take on an extra 6,000 staff in order to process all those claims. But it won’t just be more people that they need; they may also have to take on temporary office space to house them all. Then of course there’s all the IT support that needs to go with it, computers, software etc as well as the odd cleaner or two one imagines.

This is going to cost the industry a pretty penny overall, estimated at anywhere between £5 billion and £9 billion depending on which source you read.
And all because they sold expensive and useless insurance products to unsuspecting customers that did not do what it said on the tin.

But as eagle Claims points out, this is not going to cost the banks a bean in the long run and that probably includes their shareholders too.
All the cost of approximately six million aggrieved clients at about a total cost of £1,500 a pop will, at the end of the day, be borne by the banks’ customers of course.

The Mirror puts the costs to the banks (customers) as £3.2 billion for Lloyds TSB, £1 billion for Barclays, £850 million for RBS/NatWest and £275 for HSBC.