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Consumer Groups Call On Banks To Take Responsibility For Higher PPI Numbers

Official figures from the Financial Ombudsman indicate the scandal still has about 4,000 PPI claims it deals with weekly. The Ombudsman said it received a total of 340,899 new complaints in the previous financial year alone.

Chief Ombudsman Caroline Wayman said it was to be “a  year of big numbers and big changes for everyone”

“But we mustn’t lose sight of the lives and livelihoods behind every complaint we resolve.

“That’s why preventing mistakes of the past from happening again will help restore trust and fairness in financial services.”

Alex Neill, Which? Director of Policy and Campaigns, said banks themselves should take more responsibilty.

He said: “The huge number of PPI complaints still going to the ombudsman is yet more evidence that the systems the regulator and banks have put in place have not worked.

“Too many people have been driven to use claims management companies that are taking a large proportion of the compensation they are owed.

“Banks and other providers must make the process simpler and easier for customers to claim directly, or pick up the tab when consumers use claims management companies to get back the money they are owed.”

Which? and MoneySavingExpert.com had called on banks to take on the responsibility of simplifying the PPI claims process as the PPI deadline approaches.

Clydesdale Cuts More Jobs To Pay For PPI Bill

Following Clydesdale Bank’s £450 million addition for PPI refunds is an announcement to remove more than 26 branches in Glasgow and remove about 150 senior officers from its branches

After breaking off from its parent bank, Clydesdale, now known as CYBG including another NAB-owned bank, Yorskhire Bank, reported it had a 4.2 per cent fall in underlying earnings equivalent to £107 million in the last six months to the end of March.

Clydesdale was only taking about £44 million of the £450 million mis-sold PPI bill. NAB would handle the funding for the remaining £1.7 billion.

Meanwhile, its net income had increased to 2.5 per cent at £400 million in the following half-year, which it lost to refunding PPI policies. CYBG has yet to report whether it had refunded PBAs. No amount had been publicly disclosed as of yet.

Analysts said the bank was performing smoothly with a customer lending growth of 2.8 per cent in the first half of 2015. Deposits to the bank increased by 4.6 per cent.

Meanwhile, its mortgage balances grew by 4.9 per cent boosted by “very strong” buy-to-let borrowing ahead of last month’s increase in stamp duty.

David Duffy, chief executive of CYBG, said: ” I am very pleased to report good progress on all fronts in our first set of results as we execute our strategy as an independent company.”

The Rise of Scammers Due To FCA’s Stringent PPI Measures

Turning a blind eye to the growing number of scammers in PPI claiming has given claims management companies a bad identity. The rise of these fraudsters has been due to the then-Financial Services Authority’s stringent PPI claims process and measures against banks.

Financial Times Money Management Editor Jon Cudby said the FSA, along with its successor the FCA, were only focused on speeding up the claims process rather than integrating fairness and proper legal procedure.

Bank employees, to whom the entire scandal rests upon, are “guilty until proven innocent.” Banks with insufficient time and resources to supply a proper investigation into claims would outright reject them as Lloyds would or would rather pay the refund despite the claim for refund being factual.

The same case for banks is happening for packaged bank accounts. Many customers have consulted with their banks and some have earned their PBA refunds despite Financial Ombudsman warnings that the products are “quite useful” for many.

The lack of proper legislative support for banks had given rise to a multitude of scammers who had taken more than £5 billion from banks refunding PPI.

Cudby pointed out the then-FSA’s failure to act had resulted to the endless number of PPI claims in the country.

However, consumer groups said the PPI deadline is not overdue. They debate that banks have failed to accommodate the situation of legal investigation and refund into a quick process. Without simplifying the process, they deem the FCA-declared PPI deadline unfair to consumers.

PAC Criticises Government Departments For Failing To Do Enough For PPI

The Public Accounts Committee expressed its disappointment and recommendations to the Financial Conduct Authority, the Treasury, the Ministry of Justice and the Financial Ombudsman, regarding its failure to prevent and contain the payment protection insurance scandal.

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The £32 billion scandal had cost the UK banks more than half a year’s profit. It had effectively tarnished its consumer relations and it is indirectly affecting the UK economy’s recovery.

The PAC said the FCA and FOS had taken “some action” that it deems is not enough. The PAC noted the FCA’s effort to tackle the cultural problems inside the banking industry, specifically the aggressive sales culture. But it said it isn’t enough.

It recommended that the FOS create a timetable and a report on its progress regarding its backlog of PPI claims. The PAC said this has been excruciating for consumers waiting for more than two years for a decision.

The PAC criticised the Treasury for being uncertain of the FCA’s efficacy in dealing with the mis-sold PPI scandal. It also failed to establish a “good-bad” tier that would reflect the current level of mis-selling in the country.

“It is vital the government and regulators take fresh action now to better protect taxpayers’ interests, both in reducing the potential for mis-selling and, when it does occur, to ensure those affected get their due compensation,” said PAC Chair Meg Hiller.

Potential PPI-Scale Risks Abound in Pensions

According to the Public Accounts Committee (PAC) The failure of the regulation and redress system in the UK had resulted into the PPI claims scandal. It had allowed unscrupulous scammers to make money from individuals who deserved their refund.

MPs warned the new pension freedoms, introduced in April 2015, could spark a new wave of PPI-style mis-selling across all sectors.

Due to the failure of banks and the City watchdog to anticipate such undesirable parties able to conveniently scam consumers from their refunds, many may fall victim to the next scandal.

Which? and MoneySavingExpert.com criticised banks and the Financial Conduct Authority for failing to anticipate the possible scenario of unscrupulous groups taking advantage of uninformed individuals simply because banks couldn’t make it convenient to know whether a customer was mis-sold PPI and the FCA is pushing consumers to claim but did not push to make the PPI claims process simpler for consumers.

The PAC urged the FCA and the UK Treasury to identify how to contain widespread mis-selling and possible prevention methods to immediately stop it.

According to the PAC, departments and regulators have been “too passive” in allowing compensation that mis-selling victims could have received instead of scammers.

Clydesdale Bank Adds Further £450m To PPI Bill

About to pull out its UK businesses Clydesdale and Yorkshire Bank, National Bank of Australia faces a higher bill for PPI from Clydesdale with an additional £450m.

Because of its pullout and spin-off for Clydesdale and Yorkshire Bank, NAB faced a half-year profit loss at £2.1 billion.

Earlier the previous year, Clydesdale had also added about £500m for its PPI bill. This came after NAB’s decision to pull out of the United Kingdom.

NAB will commit about £1.7bn more to resolve its conduct indemnity deed. So far, it had resolved about £689m. About £300m out of £2.1bn for PPI had been repaid to consumers.

Glasgow’s CYBG claims the bank is performing well and its new PPI allocation is due to the implications of the Plevin v. Paragon Personal Finance case.

Clydesdale and NAB in general have about £2b set aside for PPI. The amount is relatively low. Lloyds Banking Group, the biggest PPI mis-seller in the country, owes about £16b to the entire United Kingdom.

The UK total for mis-sold PPI is at £32b. About £11bn is yet to reach consumers as compound PPI policies with fluctuating interest rates have yet to be determined. These policies, sold in the 90s alongside loans and credit cards, also have an 8 per cent interest rate to account for inflation.

Santander’s Profits Improved Even After PPI Payout

Santander reports a massive £532m profits before tax despite its £82m loss in the final quarter of 2015. Part of its losses were due to payment protection insurance refunds during the last quarter of 2015.

First quarter results published last April showed Santander had profited before its tax jumped 13 per cent against the same period the previous year. For its full-year results, Santander had jumped in profits by 14 per cent.

According to Santander UK Chief Executive Nathan Bostock “I am pleased to report a solid start to 2016, underpinned by strong business flows and lower loan loss provisions.”

Santander is one of the UK “Big Five” banks with a huge number of mis-sold policies from the 90s. Santander had gained a total of £2 billion for its PPI bill.

The bank has set aside more than £500m quarterly because of payment protection insurance. The bank is one of the lesser-mis-selling banks.

Lloyds leads with a £16 billion PPI refund bill. Due to delays and its complicated PPI claims procedure, Lloyds had gained tremendous administrative costs.

The total UK PPI bill is at £32 billion. Analysts estimate a £5 to £7 billion addition to the PPI bill upon the start of the FCA’s advertising campaign to resolve payment protection insurance.

Lloyds May Contact More Consumers For PPI

Following Barclays’ declaration that it would contact more than 9404 consumers of Barclays and Barclaycard, Lloyds may contact more than 15,000 consumers with wrongly-rejected PPI claims.

The estimate by experts comes after Barclays must contact consumers who haven’t received their annual statements. The annual statements include the customers’ terms and conditions for payment protection insurance.

Due to Barclays’ failure, it must consider all 9,404 consumers mis-sold PPI. The consumers should receive complete compensation including direct redress.

Lloyds has more than 10,000 consumers mis-sold PPI. With over 7 out of 10 PPI in favour of consumers, Lloyds may need to call more consumers.

Currently, Lloyds is the biggest mis-seller of payment protection insurance with a bill of £16 billion, half the UK’s PPI total of £32 billion.

So far, about £23 billion has been returned to customers according to the Financial Conduct Authority. The remaining amount of £11billion is allocated to compound PPI interest rates along with an additional 8 per cent annual interest rate to keep up its value against inflation.

Banks are to receive immediate relief from the PPI scandal through the FCA’s proposed PPI deadline by 2018. However, consumer groups are concerned because there is a lack of PPI claims process simplification. The efficacy of the FCA’s advertisement campaign is in question due to only raising awareness without technical aid.

Barclays To Contact 10,000 Customers With Wrongly-Rejected PPI Claims

Barclays and its subsidiary Barclaycard had failed to provide annual statements to 9,404 credit card customers and 740 mortgage holders, which include an explanation about their rights to their payment protection insurance since 2012.

Barclays’ failure to contact and explain to consumers about their payment protection insurance makes these consumers immediately eligible to receive their payment protection insurance including an 8 per cent interest rate.

Adam Lands, senior director at the Competition and Markets Authority (CMA) explains: “The annual statement [is] an important measure resulting from the market investigation which ensures customers know they have a PPI policy, how much they are spending on it and reminds them of their right to cancel or switch.

“Barclays has now taken the necessary steps to alert and recompense affected customers – as well as to ensure that there is no repeat in future. We trust that the extra reporting requirements we’ve put in place will confirm this.”

Barclays responded:

“Last year we identified a number of Barclays and Barclaycard customers who, due to a technical issue, had not been sent their annual PPI statements. We have written to those customers to apologise and outline how we will remediate them where they believe they would have cancelled their policy, had they received the statements.

“We apologise unreservedly to those customers affected and have put in place a number of controls to prevent this from happening again.”