2012 was a miserable year for the banks as the economic downturn took its toll and the PPI scandal a significant hindrance on the road to recovery, and it doesn’t look like it’s going to change in 2013.
A former Lloyds TSB employee Helen Weir, who headed the Retail Division at the bank from 2008 to 2010, has started the New Year off bringing banks into further controversy regarding PPI, recently coming out to apologise her involvement in the PPI scandal most Banks were in on. Helen informed the Parliamentary Commission on Banking Standards “I acknowledged the miss-selling of PPI across the Industry and at Lloyds and apologise wholeheartedly for my part in that”.
How may policies were sold?
Lloyds TSB are on example of the sheer scale of PPI charged on mortgages and credit cards, by taking a look at look at figures from 2001 when Lloyds sold approximately 2 million payment protection insurance policies and went on to peak at 3 million PPI policies sold in 2003. PPI was spread across a number of products such as loans, credit cards and mortgages and lenders are said to have added this to loan agreements without the consumers full understand or purpose of the protection policy.
What can we expect?
The figures mentioned explain why this year the Financial Ombudsman Service has predicted that a staggering further 250,000 complaints for the miss-selling of payment protection insurance by Banks and Lenders will be made this year. This continued increase in claims has seen the amount of money that was predicted to be owed has risen dramatically, as the banks proceed to stagger the information possibly in a bid to dampen the hype around PPI that seems to be flourishing. Figures originally were estimated at £9 Million when claims started going through, and that expected to double estimates made just last year of £13 Billion to a possible £20 Billion.
Due to the high amount of PPI complaints, the time in which it takes for the consumer to receive their compensation has increased as the back log continues to grow. To begin with some lucky consumers were waiting just weeks retrieve the amount owed but this progressed to approximately 3 months and is looking at potentially a year for some disputes to be settled. However the FOS has recently fined CO-OP £113,000 for stalling on PPI pay outs. The back log as forced the Financial Ombudsman service to increase the number of staff by 1000 to increase the speed in which complaints are being processed and disputed ultimately being settled as quick as possible so the Finance industry can forget about PPI and move on.
It seems almost endless, but hopefully that won’t be the case. It looks as though next year the FOS may reach a point they will put a deadline on consumers making a claim, to allow the recovery process for the financial industry to begin.