PPI payouts near £2bn – but should have been more, says Which?

Thursday 23rd February 2012

Banks paid out £1.9bn in compensation last year for the mis-selling of PPI, the FSA has said.

But Which? reckons this was only about one-quarter of what should have been paid out after banks set aside £7.6bn to deal with the problem.

Payouts accelerated as the year went on, with a monthly record of £441m in December, up from £268m in October and £379m in November.

The FSA’s figures are based on those supplied to the FSA by 19 unnamed firms which account for the large majority of PPI cases.
 
Typically – and in an unexpected boost to the economy – successful claimants receive more than £2,750 in compensation, although some payouts have been far bigger.

Most were mis-sold because they would never have been able to claim on the policy – often because they were self-employed – or they were not made aware that they did not have to buy the policy when they got a loan.

The Financial Ombudsman Service has received about 300,000 PPI complaints so far and is receiving around 1,000 new ones every day. It is currently upholding around three out of four cases in the consumer’s favour.

But consumer watchdog Which? has urged banks to speed up their PPI claims processes.

It warned that delays were creating an ‘open goal’ for dubious claims management companies to step in.

Which? executive director Richard Lloyd said: “It’s good to see the PPI payout is finally starting to speed up, but last year’s compensation of £1.9bn is a quarter of what lenders expected to refund.

“Too many people are still finding the claims process too lengthy. The banks must streamline the process to make it easier for people to claim. Otherwise, this leaves an open goal for claims management companies that charge people a hefty fee for putting in a claim which is easily done yourself for free.

“Which? has found dubious practice by claims managers, including bombarding people with misleading information about getting PPI compensation.”