Official figures show that the amount of compensation paid to successful PPI claimants has jumped by almost £100 million in a single month.
The total paid for July was £432.9 million – up by £92.6 million on June’s total of £340.3 million – raising the overall total to £36.4 billion since January 2011.
It is the first hint of just how much the last minute rush of claims might cost the banks as the jump relates to claims made as much as four months before the August 29th claims deadline.
The FCA figures are always released two months in arrears and our own experience shows that it can take between 8 and 16 weeks for a lender to reach a final decision on a claim and pay redress to the consumer.
Lenders across the board admitted they were swamped by the number of late claims in the weeks leading up to the deadline, but as yet they have not given any accurate indication of the number of claims they have received.
The only clues available have been the statements made by two of the banks who decided to raise their PPI provision by £3.4 billion between them after the deadline in anticipation of the amounts they would have to pay out.
By far the biggest was Lloyds Banking Group (LBG) – which includes Halifax and Bank of Scotland.
Adding a massive £1.8 billion to the £½ billion it had added before the deadline, LBG said it was receiving between 600,000 and 900,000 new PPI information requests (PIRs) a week in the run-up to the claims cut-off.
When it announced its half year figures in July Barclays said it believed the £360 million it had left in its pot would be enough to see it to the deadline. But just days after the deadline passed it announced it was adding another £1.6 billion.
It didn’t give an exact number of new claims per week but cited a ‘significantly higher volume of PPI-related claims’ for the increase.
Interestingly, none of the banks have said their PPI pots now definitely hold enough to pay out future successful claims.
Instead they have said the will continue to monitor the situation and would not rule out further increases.
The FCA believes around 64 million PPI policies were sold over the last three decades and while no-one has put an accurate figure on the number of claims already made it is accepted it is a mere fraction of the potential number.
Having had so long to prepare for the last minute rush the banks will know with a fair degree of accuracy how many late claims they have received, but it will be many months yet before they have all worked their way through the system and the final accounting can begin.