SantanderUK has seen profits slump by 51% after putting aside £731m to cover claims over the mis-selling of Payment Protection Insurance (PPI), it has emerged.
Along with theUK’s other high street banks,Santanderis preparing for an onslaught of claims from customers who were wrongly sold PPI after taking out loans. In April the high court ruled that banks must offer refunds on PPI after significant numbers of people found they were sold the insurance but were ineligible to make a claim.
The £731m PPI fund Santander has set aside pales in comparison with the £3.2bn earmarked by Lloyds Banking Group, but it was still enough to bring Santander UK’s profits down by 51% to £413m for the six months to the end of June.
“Santander UK has delivered profit in the first six months of 2011 maintaining its strong track record of profitability and balance sheet strength,” the bank said in its latest report. “In line with otherUKbanks, a further provision for Payment Protection Insurance remediation has also been made.”
PPI was widely sold to customers who take out loans, mortgages and credit cards – and is designed to cover people in the event they lose their job and can’t make payments for a while. But the Office of Fair Trading (OFT) found that while around seven million new policies were sold every year, only 20% of the money collected in premiums was paid out in claims.
That compares poorly to other insurance policies, such as car insurance – which pays out 82% of premiums in customer claims. Regulators also found examples of cases where people tried to make claims but found out they were ineligible and should never have been sold PPI in the first place.
Sally Bowyer, Managing Director of leading financial claims firm Brunel Franklin, said that consumers could recoup many years’ worth of premiums plus interest. “If you were mis-sold PPI, you may be entitled to several years’ premiums plus 8% interest, which can in some cases amount to several thousands of pounds.”
Learn more about PPI refunds and find out if you could apply for a refund today! Visit the website www.brunelfranklin.com or call Brunel Franklin, free, on 0800 051 54 51