Years before Mis-Selling PPI Scandal Ends: UK Banks
Published By : 06 Jan 2015 | Published By : QYRESEARCH
According to the announcement made by London’s chief financial ombudsman, Britain banks will be paying out compensation amounts to their customers’ mis-sold loan insurance in the coming years. The banks have already set aside an amount of 24 billion pounds ($36.5 billion) to convene to the overall issue.
The Financial Ombudsman Service is made available only when customers and banks cannot come to a mutual agreement. The service says in the next financial year it is expected to settle 250,000 disputes that have been raised about the mis-selling of payment protection insurance (PPI).
PPI policies have always existed in the light to protect loan borrowers in the event of unemployment or sickness. PPI policies were often sold to those individuals who would have been ineligible to claim for insurance. The compensation bill has thus become Britain’s most expensive consumer scandal.
From a peak of around 12,000 cases a week observed in late 2012, the ombudsman continued receiving around 4,000 PPI complaints each week. PPI complaints are still the key driver of financial disputes.
More than any other bank, Lloyds Banking Group has established 11.3 billion pounds aside for compensation. In addition, HSBC and Barclays, Royal Bank of Scotland have also set aside billions of pounds.
The ombudsman further said in its proposed plan and budget for the 2015/16 financial year, that it would appoint 200 new staff to manage new complaints pertaining to PPI and many other matters.
Ombudsman is funded by the financial services industry and thus, it is planned to suspend case fees paid by businesses.