Latest figures released by the Financial Conduct Authority (FCA) shows the amount paid by Britain’s banks fore mis-sold PPI is now £29.6 billion.
PPI claims compensation has become one of the biggest financial scandals ever seen in the UK and pressure is growing from some commentators for the regulator to put back the claims deadline scheduled for August next year.
The new figures show £366.9 million was paid out in December, bringing the total for 2017 to £3.34 billion, an average of more than £¼ billion a month.
PPI has been mis-sold for more than two decades and when the scale of the scandal first came to light the estimate was that they total of compensation payable was not likely to exceed £3-4 billion.
But that was before the nation woke up to the sheer scale of the mis-selling.
As the monthly payouts started to rise the country’s financial watchdog, the Financial Services Authority (FSA) told the banks that they would have to change the way they investigated and paid out claims.
The British Bankers’ Association (BBA) decided to appeal the decision because it would force their members to investigate all potential claims and would also be retrospective. They called for a Judicial Review in the High Court and lost.
The resulting publicity opened the floodgates for new claims. In May 2011 – the date of the Judicial Review decision – the total payout for the month on successful PPI claims was £39.8 million. Within a year that figure had risen to £735.3 million – still the record for a single month.
As the monthly payouts continued in the hundreds of millions, in 2014 the BBA approached the new Financial Conduct Authority (FCA) – the successor to the FSA – about putting a deadline on future claims.
At that time the FCA refused, but promised to monitor the situation and would only approve a deadline after a consultation with all interested parties.
Pressure for the deadline continued as the compensation payouts continued and in 2016 the FCA announced they felt the time had possibly come for a deadline to be considered.
In a statement they said: “The FCA now considers there is a case for intervening further in PPI and that introducing a deadline and running a communications campaign would:
- Prompt many customers who want to complain, but have not yet done so, into action, resulting in them potentially getting redress sooner and giving some of them the opportunity to pay off costly debt.
- Bring the PPI issue to an orderly conclusion, reducing the uncertainty for firms about long term PPI liabilities and helping rebuild public trust in the retail financial sector.”
The provisional date was suggested as the spring of 2018, but following the promised consultation with all interested parties the FCA finally announced the deadline would be August 29th 2019
Unsurprisingly news of the deadline date brought a spike in claims which caused the high street banks to re-appraise their PPI provision and to increase it by millions of pounds.
The New City Agenda think tank puts a figure of £44.2 billion on the money set aside so far, but researchers believe the final figure should be closer to £100 million as there are potentially millions of claims still to be made.
The FCA believes between 45 and 60 million PPI policies have been sold and to date there have only been around 20 million claims. Commentators believe that the 2019 deadline date is too tight to accommodate the number of potential claims and should be put back to allow everyone with the right to claim the time to do so.