The Banking Industry Considers PPI Deadline Proposal

It has been reported that the UK banking industry and the Financial Services Authority (FSA) are considering placing a deadline on Payment Protection Insurance claims in an attempt to temper the number of complaints being made.

A backlog of complaints and billions of pounds worth of payouts are currently being disputed by affected customers and their banks. The proposed deadline is an attempt to help the UK Banking Association tackle the growing backlog and costly stream of PPI claims. This is sure to upset UK citizens who plan to make a PPI Compensation claim with more than 1,000 complaints being made every day.

The proposal is not yet set in stone but is being considered alongside other options. An FSA spokesperson revealed: "As you would expect for an issue of this scale and complexity we have discussed and considered a number of different options and continue to do so. PPI is an ongoing and high-profile issue and we are monitoring it closely."

UK banks and lenders are concerned that they will have to make further contributions to the PPI Compensation reserve. So far, the major banks and lenders in Britain have set aside more than £12bn to repay customers who are entitled to compensation. Any further contributions will have to be revised should this deadline come into effect.

The most effected bank to date is Lloyds Banking Group who has set aside a staggering £5.3bn. Barclays recently added to their PPI reserve which now totals at £2bn.

As well as costing many of the major banking groups a significant amount of money, an insurmountable damage has been done to the entire industry’s image. Watchdogs and financial groups are now calling for a clearer, more transparent approach to the financial services industry.

The FSA’s managing director Martin Wheatley compared the PPI scandal to an oil spill in respect to the long term effects and ongoing damage.

He claimed: "One of the key lessons we have learned from previous market failures such as PPI is that it can be much more effective to intervene early; to pre-empt and prevent widespread harm to consumers from happening in the first place, rather than clear up after the event." 

Payment Protection Insurance was designed as a safety product in loan and credit card deals. The product was originally supposed to aid customers make repayments on credit card or loan deals. However it was widely sold to customers who did not request or require it. In some cases, the customer was not even aware that the product had been included in the deal. Those who have been mis-sold the product as part of a credit card or loan deal may be entitled to compensation.

PPI Complaints now Topping 1,000 a Day

It has been described as the largest financial scandal in British history. It is calculated that there is now more than 1,000 complaints regarding Mis-Sold Payment Protection Insurance being made every day. With banks and lenders falsely rejecting a significant number of complaints, Claims Management Companies and the Financial Ombudsman Service (FOS) have had to pick up the slack to try and bring monetary justice to those who were Mis-Sold PPI.

Banks and lenders are unfairly rejecting tens of thousand of Payment Protection Insurance complaints. Many of these rejected parties are refusing to take no for an answer and seek the compensation that they deserve elsewhere.

Out of the UK banks and lenders, Lloyds Banking Group has been the hardest hit. The banking giant has had to set aside more than £5bn to cover the Payment Protection Insurance repayments that they expect to make. The bank receives 65,200 complaints regarding PPI every month. Of these 1,600 are rejected and subsequently referred to the FOS. Out of this 1,600, a staggering 98% are upheld by the FOS. This suggests that 98% of PPI Refund complaints refused by Lloyds are unfairly done so. Similarly Barclays were found guilty in 93% of cases, Royal Bank of Scotland 87%, HSBC 66% and Nationwide 18%.

In early 2011, the banks which were guilty of mis-selling Payment Protection Insurance lost a decisive court case which determined that they would have to pay the refunds to the affected customers. Although this decision tied their hands, banks have complained of customers seeking compensation that they are not entitled to. Banks and lenders have described some customers seeking PPI Compensation as ‘ambulance chasing’ opportunists. Banks and lenders offered Payment Protection Insurance as a product to protect their payments. It was intended to help customers make repayments on credit cards and loans even in times of financial or medical hardships. However, many of these policies were sold to customers who did not request or require them. In some cases, the product was sold to those who were not even applicable and had no use for the product.

Thousands of Tenants due PPI Refunds

More than £125m looks set to be repaid to Scottish tenants who have been targeted by unscrupulous agents adding Payment Protection Insurance-style payments to their fees. The tenants who have been wrongly charged the additional fees are to challenge the illegal letting fees scam are ready to ‘trigger an avalanche of PPI-style payouts.’

PaymentProtection Insurance is most commonly associated with agreements made with banks and lenders. However, PPI and similar plans were added to agreements through a wide range of different mediums. Even the likes of online retailers have been found guilty of adding PPI to payments for their services.

The Scottish Sunday Express is leading the charge to help tenants Reclaim PPI-style funds. The newspaper is battling to have a little known 28-year-old law which renders additional charges on tenancy agreements illegal. Only the rent and a refundable deposit are legal permitted to be charged to tenants.

Gordon MacRae of Shelter Scotland said: “This is the newest mis-selling scandal to hit Britain – you could say that this is going to be the new PPI.”

Shelter Schotland have revealed that 1,500 tenants have already reclaimed more than £280,000. Furthermore 90% of Scotland’s 500 letting agents were found guilty of illegally charging fees, this equates to around 135,000 lets from last year.

A petition to ban similar letting fees in England has been launched on the Downing Street website. If this law came to pass, it could have widespread effects on millions of tenants and agents throughout the country.

With millions of Britons having already successfully claimed against their bank or lender for PPI Compensation, they may be buoyed to seek further claims. Successful PPI compensation cases have served to reinforce the sense of financial justice in the country.

The Mis-sold PPI scandal has become the largest financial scandal that the UK has ever faced. With banks and lenders having set aside £12bn already to repay the money that they unlawfully charged their customers. The scandal has affected millions of Britons and became a semi-premanent fixture in the British media.

How Banks Mis-Sold PPI to Millions

It has been the scandal that has gripped the nation. Millions of unsuspecting Britons have become unwittingly embroiled in the Mis-Sold PPI saga. UK banks and lenders have extracted billions of pounds from their loyal customer base under the disguise of a helpful service.

Payment Protection Insurance was designed to help customers repay debts on loan and credit card agreements when they suffer from loss of income. However, the high dividends it reaped for the banks led them to mis-selling PPI to many customers who did not request or require it.

It seems staggering that millions of Britons have agreed a deal that they do not want or need. Now an ex-Natwest employee has lifted the lid on the banking industries guarded PPI secrets:

"Each quarter the branch had to achieve a certain amount of sales points. We earned these through selling mortgages, packaged accounts, credit cards, referrals to the financial planning manager, and PPI. Large loans with PPI secured the most points.

"Our quarterly bonus depended on how many points the branch as a whole achieved. I recall that hitting 120% of target meant our bonus would be in a higher paying threshold. Working in a branch didn't pay very well, so the bonus really helped.

"In my role as a customer adviser I had to sell 10 loans a week with seven or eight having PPI – this was known as the penetration target. There was plenty of training in 'disturbance techniques', making the customer feel anxious about their ability to repay the loan in the event of accident, sickness, unemployment or death. Every morning we would meet with the manager to discuss how many loans with PPI and other products we would sell. If a customer refused to take PPI we had to explain to the manager the reasons given and which sales objections techniques we used. 

"If after two weeks an adviser's PPI penetration was less than 70%, the regional manager would phone to ask why. Every day managers would receive calls to ask how many loans with PPI had been sold. The back office had a large whiteboard showing the number of loans and other products sold. When the area or regional manager was due to visit we felt under intense pressure to make sure we had sales written on it.

"One morning the area manager arrived unexpectedly and no sales had been made. She shouted 'this isn't good enough' and started to interrogate staff on their underperformance.

"If an adviser hadn't hit their target for the month they would be placed on a performance development plan. This could lead to dismissal if sales remained below target for a few months in a row. In practice, most underperforming advisers resigned or moved to non-sales roles. Many advisers had enough after a year or didn't pass probation, as the pressure was immense.

"I felt that the product wasn't suitable for most joint loan applications. We were told that personal loan protection, NatWest's name for PPI, would ensure a customer's loan repayments were paid in the event of accident, sickness, unemployment or death. I was under the impression it would pay out. But if the second applicant was unable to earn an income, it wouldn't cover them. This meant PPI was unsuitable for most customers taking out a joint loan. We had to highlight that only the first applicant was covered, yet we did it in such a way to make it look insignificant.

"We knew PPI was overly expensive, with some insurances costing £100 a month. There were plenty of other insurances on the market that could offer similar or more suitable cover at a much lower cost.

"There were many times I felt a loan was an unsuitable product and PPI was too expensive or didn't cover all the customers' needs. I remember selling a £25,000 loan with protection to one particular customer who earned about £18,000 a year. It was to consolidate all her credit cards. I felt she wasn't in control of her spending and could benefit from impartial debt advice. A few months later she came back saying she had started spending on her credit cards again. If I had given her honest advice I would have been disciplined. As far as banks were concerned the only good advice was further borrowing.”

This revelation suggests that everybody that has bought a loan or credit card from a UK bank or lender may have signed up to Payment Protection Insurance without realising it. Anybody who has taken out such an agreement is implored to check the details to discover if they may be entitled to reclaim PPI.

A Third of PPI Compensation Still Due to be Claimed

Millions of Britons are unaware that they are still owed mis-sold Payment Protection Insurance compensation. The Financial Services Authority (FSA) have revealed that £3.5bn has been reserved for the outstanding compensation payment.

The FSA estimate that this equates to 35% of all claims that UK citizens are entitled to.

Most of the UK population are aware of the Payment Protection Insurance scandal due to its widespread exposure in the media. It is the topic of coversation amongst friends and family, but millions still remain unaware that they too are entitled to make a compensation claim.

Payment Protection Insurance was included in many loan and credit card agreements against the will of the customer or without their prior knowledge. This is mis-sold PPI. Those who were not informed that they were receiving the insurance are the most likely to be unaware of their potential financial windfall.

Thousands of pounds can be accrued by simply re-addressing the details of the loan and credit card agreements. People still unsure as to whether they are entitled to compensation should contact a PPI claims specialist. All types of loans including mortgages were targeted for the Payment Protection Scheme.

It is illegal to include Payment Protection Insurance in loan and credit card agreements to people in full time education or not in full time employment. Citizens who agreed loan and credit card agreements in such a situation should comb through their agreement details to determine whether or not PPI was included in the deal. If the agreement does include Payment Protection Insurance then they are entitled to claim PPI compensation.

The major UK lenders have reserved a staggering £10bn for the compensation due for mis-sold PPI claims.

Having underestimated the total number of claims that would be made in the UK, banking behemoth Barclays added a further £700m to their mis-sold Payment Protection Insurance fund this month. Combined with the £1bn reserved in 2011 and £300m set aside in the first quarter of 2012, the UK lender has now stocked £2bn for mis-sold Payment Protection Insurance compensation.

This followed Lloyd Banking Group’s decision in July of this year to add another £700m to their mis-sold PPIcompensation reserve. The partially nationalised bank is the largest hit of all the UK lenders amidst the mis-sold Payment Protection Insurance scandal with it costing them £4.3bn to date.

Payment Protection Insurance was sold with the intention to guarantee repayments can still be made even when the customer suffers from a loss of income. However this was widely mis-sold to those who did not want or need it.