The end of the Payment Protection Insurance (PPI) claims scandal is nowhere to be seen as yet another major lender sets aside hundreds of millions in compensation.
High street bank Barclays has set aside another £900m to cover PPI refunds to customers mis-sold the insurance product. The extra cash takes the total set aside by Barclays for PPI payouts to a whopping £4.8bn, second only to government-backed Lloyds.
PPI the worst banking scandal in history
Consumer champion Which? confirmed this week that the mis-selling of PPI is officially the worst banking scandal in UK history, with the total set-aside now over £23bn. The total could rise further next week as Lloyds Banking Group is poised to update the market on trading figures and compensation payouts.
Barclays, like most high street banks, have been caught out by the number of customers claiming their PPI premiums back. Not one of the major lenders could have predicted the amount they have had to set aside for PPI compensation and some industry analysts predict that a further £15bn will be added to the pot of the next three years.
PPI claims companies boost payouts
The latest £900m aid is mostly to cover claims related to policies sold more than 10 years ago, many of which have been managed by claims companies. At the last count, two thirds of all PPI claims are brought through a claims company, which claimants seeming to prefer to pay for a hassle free process over doing the work themselves.
Speaking about their role in the PPI claims scandal, James Sanders of a ppi calculator company commented: “I’m sure had we and other claims management companies not been around, the total PPI compensation bill would be a lot lower, in fact the banks would be a lot better off!”
He added: “Most people prefer to use a claims company, probably because they are busy but also because they know the games that banks play. Delaying claims, rejecting claims, it’s all been proven, but when you pay a company to take care of it they won’t stand for such behaviour and will ensure the claimant gets anything they are owed.”
Profits strong, despite PPI payouts
While the total paid out by Barclays, £4.3bn, may seem a colossal figure, one has to bear in mind that it’s a bank and therefore easily makes that back each year in profit. In fact the latest January-July report for Barclays shows profits of £3.3bn, so they won’t be too worried about £900m coming out of the coffers.