Payment Protection Insurance (PPI) has been mis-sold for a lot of reasons. This may be from consumers unknowingly charged by some providers during the course of sale or not informing them that the policy was optional.
The resulting fallout has not only continued to damage the banks’ credibility in the eyes of customers, especially in the light of controversies over bankers’ bonuses amid the recent economic slump. That’s because the PPI scandal has also cost the banks plenty of cold, hard cash, with it being revealed at a hearing in January that the banks could be left some 4.5 million out of pocket simply as a result of implementing recent proposals put forward by the Financial Services Authority (FSA).
According to FSA guideline which was issued last December, banks should review all their PPI transactions and without delay get in touch with those who have been mis-sold of the policy to properly reimburse them. On the other hand, the British Bankers Association (BBA) immediately requested a High Court judicial to review the FSA guideline which also covers those policy holders that have not filed a complaint.
BBA representative, Lord Pannick QC informed the ruling judge Mr Justice Ouseley that it will cost the banks 3.2bn to handle all PPI complaints. Such amount were based on the 20% take up of contacted customers holding PPI policies since 2005.It is believed that PPI providers will pay an additional 1.3bn for new complaints filed within the coming five years.
Moreover, the BBA representative also imposed that there were an error in the implementation of the guidelines as it will constitute a big burden on the firms which is against the set conduct of business rules. Nevertheless, the High Court gave a verdict in favour of the consumers thus ordering the banks to pay the policy holders refunds totalling billions of pounds.
Barclays, for example, announced in May after the April High Court decision that it would set aside 1bn to cover both customer redress and administration costs. The new chief executive at Lloyds, meanwhile, Antonio Horta-Osorio, confirmed that the bank would be ceasing its own battle with the FSA and increasing the amount that it put aside for PPI refunds to 3.2bn.
Obviously the PPI scandal is a big blow to the financial industry in theUK. According to analysts, it will cost the banks more than the FSA initial estimate of 4.2bn and could probably reach 8bn to more than 10bn to correct the biggest blunder they have committed to their clients.
Sally Bowyer, Managing Director of leading financial claims company, Brunel Franklin, said that the amount of people who have currently lodged an application for a PPI refund is the tip of the iceberg. “We are seeing steady growth in PPI refunds and the trend is set to continue,” said Sally. What we know is that many millions of policies are in existence and it appears that a large proportion may have been mis-sold. Therefore it is imperative that people check the small print of their loan and other credit agreements, to see if they unknowingly have PPI.”
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.