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Banks' PPI mis-selling redress set to hit £25bn

by Daniel Grote on Jan 07, 2013 at 07:53

Banks' PPI mis-selling redress set to hit £25bn

Banks are likely to be forced to pay £25 billion in redress for payment protection insurance mis-selling, nearly double the amount they have set aside, according to The Times.

It said calculations using the Financial Services Authority's (FSA) monthly PPI payout figures and historic selling data showed the final banks would dwarf the £13 billion currently set aside.

The jump comes after the FSA ordered banks to write to customers sold PPI to invite them to consider claims. It suggests big increases to bank provisions in their third quarter results last year to do account for the scale of the problem. In November Lloyds Banking Group increased its provision by £1 billion to £5.3 billionBarclays set aside a further £700 million, and Royal Bank of Scotland hiked its provision by £400 million to £1.7 billion. HSBC raised its provision for British 'customer redress programmes' - largely due to PPI selling - by $553 million to $2.1 billion.

4 comments so far. Why not have your say?

Charles Rickards

Jan 07, 2013 at 08:28

Talk about mis-selling! Makes me wonder how much of the payout has been based on spurious claims? It seems odd that the claims management companies can be allowed to get away with trying to coerse people into making a claim.

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Paul Barnard

Jan 07, 2013 at 11:00

I know someone who works for a large company involved in processing of these "claims". Even people who have claimed on their policies will be re-imbursed if they put in a claim as it is cheaper for the bank to deal with it in that way; it is very cheap for them as they are owned in substantial measure by the taxpayer. In the meanwhile , companies like Wonga continue to ply their evil business.

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Julian Stevens

Jan 08, 2013 at 09:28

Something is surely very awry when, as seems to be happening, banks and other institutions are proactively writing to customers offering them "compensation" for having been mis-sold PPI policies against which they've successfully claimed.

Given that these compensation costs are met, ultimately, by shareholders and other customers, one has to ask if the FSA considers this to be a healthy state of affairs for the industry as a whole. Whilst people should certainly be compensated for blatant mis-sales, what we're seeing now with PPI claims has gone way beyond fair recompense for genuine victims.

At this rate, CMC's and the public will greet every new announcement of possible mis-selling as yet another opportunity to perpetuate what appears to have become a succession of feeding frenzies based on frequently fraudulent claims, like piranhas attacking once-unassailable river monsters stranded in shallow water.

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Barman

Jan 08, 2013 at 09:31

I think this is the lesson the banks needed to force them to rethink how they seek profits from retail clients.

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