Since the early 2010s, millions have been paid out from various banks and lenders in the form of compensation. This has increased in recent years, with the FCA putting a deadline into place to provide a buffer for banks and increasing urgency. Since then, an increasing number of borrowers have been making PPI claims against their banks for compensation. The effect that PPI compensation claims has had on those that were mis-sold it has been huge. However, how could PPI compensation have an effect on lenders?
The deadline has been set for 29th August 2019 and as a result, banks and lenders are contacting borrowers about potential claims.
Leading Banks Affected
Some of the leading banks affected by the PPI scandal include:
The beginning of August 2018 saw Lloyds Bank add another £460 million to pay for costs for PPI claims. This resulted in a huge £19.2 billion allocated sum to settle any claims. The bank have averaged that 13,000 complaints will be made a week until the deadline. Lloyds have even claimed that an extra 1,000 complaints a week would cost the bank another £150 million.
Since the year 2000, Lloyds Bank have estimated that they mis-sold around 16 million PPI policies. This figure did include policies that were not mis-sold, but contained high levels of commission.
The Royal Bank Of Scotland
The Royal Bank of Scotland (RBS) also had to put aside a large sum of money to cover compensation costs. 2017 saw an additional £175 million put aside for PPI claims by RBS, though it is reported that a quarter of customers are often left unhappy regardless. The process is said to be difficult to navigate and often unsuccessful even when entitlement is obvious.
In 2017, Barclays also had to set aside an extra £700 million for compensation costs. This took the bank’s total, at the time, to a provisional £9.2 billion. Barclays are often reported to be the most attentive bank for PPI claimants, though the Chairman, John McFarlane, was condemned after claiming that PPI had turned british citizens into fraudsters.
During 2017, HSBC also had to add an extra £456 million to their PPI fund, which took the provisional total to £3.65 billion. Fortunately, this isn’t as much as Lloyds have put aside, though it still rests as one of the highest amounts dedicated by banks to the PPI claims.
A New Bill For Banks
In July 2018, it was announced that the banks in Britain could face a big PPI bill. This additional sum would add billions to the £30 billion already paid out in compensation.
This bill could cause issues for banks or lenders in terms of funding, but offers good news for the buyer however, as they will still be able to claim back money.
With banks having already paid out an extortionate amount, they are looking ahead to the deadline as an end to PPI.
With customers claiming their PPI compensation sporadically, these banks don’t have an exact plan as to when people will claim their money. Not only have the banks lost plenty of money thus far, but their reputations have been affected dramatically. This could result in banks losing some customers in the future, because they no longer appear to be trustworthy. Customers want a creditable, reliable bank with whom they can put their money safely.