With just a week to go before the PPI claims deadline, the total payout of compensation has reportedly smashed the £36 billion barrier.
Figures from the Financial Conduct Authority (FCA) reported in several national news media show that £340.4 million was paid out in June to bring the overall total to more than £36.04 billion.
The payouts maintain the average monthly increase in the total of £⅓ billion and if that momentum is maintained to the end of the year we could see another £2 billion added.
Although the deadline for new claims is midnight on August 29th, Britain’s lenders have been flooded with millions of new claims in the lead up to the cut-off date.
At one stage Lloyds Banking Group (LBG) was receiving 13,000 new complaints a week.
So great has been the response to the FCA’s consumer awareness campaign that some of our biggest banks have been adding massive amounts of money to their PPI pots in recent months to try to ensure there is enough money on hand to pay out successful claims.
Both LBG and HSBC added more than £½ billion each and Santander decided they might need another £700 million too.
Across the industry there is an estimated £10 billion waiting to be paid out if it is needed.
In fact, when announcing their increased provisions, most of the big banks were careful to say that they did not rule out having to set aside more cash if the volume of complaints proved to be larger than their estimates.
Analysis by the Mail On Sunday came up with a final payout figure of £44 billion. Journalist Helen Cahill said: “Documents published over the past two weeks reveal that the amount set aside by large lenders to pay PPI redress jumped by £2.4 billion in 12 months.
Scores of firms
She said: “They had already set aside more than £40 billion to pay compensation because scores of firms sold payment protection insurance to loan and card customers who did not want or need it.
“That would take the total for the largest seven banks and the Nationwide Building Society to £43.7 billion.
The overall figure for PPI compensation when all lenders are included in the calculation is likely to be significantly higher.”
Time running out
With time rapidly running our to make a claim FCA spokeswoman Emma Stranack said: “We all lead busy lives, and the FCA is prepared for a last-minute flurry of enquiries.
We’ve extended our PPI helpline hours to 8pm on weeknights and 5pm on Saturdays to provide further support to consumers and will be available for calls on bank holiday Monday. Ultimately, we don’t want the UK public to miss their chance to decide.
“So, if you think you might have had credit with a PPI policy attached – particularly in the 90s or 00s – now is the time to get in touch with your provider.
You need to submit your claim by midnight on August 29th or you won’t be able to claim money back for PPI.”
PPI won’t stop at the deadline
Of course, PPI won’t stop at the deadline – it will be with us for months as the last cases work their way through the system and the Financial Ombudsman Service (FOS) still adjudicates on appealed rejections.
Even after a decade, PPI remains the most complained about product they deal with. The cases are this which have consumers believe have been wrongly rejected by a lender and, if FOS believe the consumer is right.
They can reverse the decision and require the lender to pay compensation.