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Banks' final PPI bill to hit £44 BILLION
Recently there was an interesting article by Helen Cahill from the Mail On Sunday about the astronomical final figures of the PPI Payout you can read it below:
That won't be the end of the payouts as whistleblowers line up to expose new scandals
- So far, banks have handled more than eight million claims
- The average redress per claim has been £2,046, our analysis found
- Banks have been forced to pay out compensation on a huge proportion of their PPI policies
The PPI mis-selling scandal will have cost Britain's biggest banks and building societies almost £44 billion by the time payouts end later this year, analysis by The Mail on Sunday shows.
Documents published over the past two weeks reveal that the amount set aside by large lenders to pay PPI redress jumped by £2.4 billion in 12 months.
They had already set aside more than £40 billion to pay compensation because scores of firms sold payment protection insurance to loan and card customers who did not want or need it.
The Financial Conduct Authority watchdog has given customers a deadline of August 29 to make a claim for compensation, so the PPI provisions booked in banks' most recent year-end results will likely be their last.
That would take the total for the largest seven banks and the Nationwide Building Society to £43.7 billion. The overall figure for PPI compensation when all lenders are included in the calculation is likely to be significantly higher.
Banks are desperate to move on from the costly PPI saga, which has been a major drain on profits since it was first publicised more than a decade ago, but there are now new scandals emerging from the shadows.
The Mail on Sunday's study of the annual reports filed by Lloyds, RBS and HSBC has found that increasing numbers of bank staff are raising the alarm. The total of whistleblowing cases at RBS rocketed by 66 per cent last year to 480, while reports at HSBC leapt by 30 per cent to 2,068.
Lloyds, which revealed a £4.4 billion post-tax profit last week, is still dealing with misconduct issues from its past.
It has set aside an additional £151 million due to the poor treatment of customers who fell into arrears on their mortgages, taking the bill to £793 million bill for failings which are under investigation by the FCA.
Lloyds also faces a £795 million bill for the alleged mis-selling of packaged bank accounts. Banks have been accused of using pushy agents to sell paid-for current accounts that include a bundle of products such as travel insurance and car breakdown cover.
In Lloyds' annual report, Alan Dickinson, chair of the bank's risk committee, said: 'Whilst PPI mis selling is by far the most costly and well known issue, there remain many smaller issues which have been identified over the years since the financial crisis.
'The group has established very considerable resources to address these potential redress requirements and has made material progress over the last 12 months in resolving these matters. In very many cases our customers may have been unaware of their potential claim.'
Lloyds has set aside £19.4 billion for PPI redress in total. Barclays, RBS and HSBC have set aside £9.6 billion, £5.3 billion and £3.9 billion, respectively.
CYBG, Santander, Co-operative Bank and Nationwide have allocated £5.5 billion between them, although some are yet to report final figures.
So far, banks have handled more than eight million claims. The average redress per claim has been £2,046, our analysis found.
Banks have been forced to pay out compensation on a huge proportion of their PPI policies, with HSBC saying it expects complaints relating to 49 per cent of the total policies sold.
Barclays' chairman John McFarlane claimed last year that the PPI scandal had turned 'portions of Britain into fraudsters'. His comments sparked a backlash from consumer groups.
Article credit: HELEN CAHILL, FINANCIAL MAIL ON SUNDAY