On the day that Barclays announces a further £600m towards payment protection insurance (PPI) provision, new Which? research reveals that the big banks’ PPI compensation will be used up in 2013.
Barclays increases PPI provision
Barclays bank has announced that it has increased its PPI provision by £600m. The total amount of £2.6bn committed thus far by Barclays means that the total set aside by the big banks has now reached £13.6bn.
PPI, or loan protection, was sold to cover loan repayments if the person became ill, had an accident or lost their job. However, the PPI policies were mis-sold to those who did not want or need them, or would have been unable to make a claim if they unable to work.
Banks such as Barclays, NatWest, Lloyds TSB, Halifax, Santander and HSBC made billions of pounds by heavily promoting payment protection insurance when loans, mortgages and credit cards were arranged. Over the last few years, thousands of people have subsequently received compensation from the banks as a consequence of being mis-sold PPI, with the average pay-out being just below £3,000 per person.
Which? analysis shows money will run out in 2013
If current pay-out rates on payment protection insurance continue, Which? estimates that even with the increase, Barclays’ new provision would only last until about October this year.
In fact, Which? analysis suggests that, if PPI pay-outs continue at the same pace as last year, the following major banks’ provisions would be used up by the estimated dates indicated:
- Lloyds Banking Group – March 2013
- RBS – June 2013
- Barclays – October 2013
- HSBC – December 2013.
Which? executive director Richard Lloyd said: ‘Some banks have been in denial about the true scale of the Payment Protection scandal. They must come clean about how many more PPI complaints they’re expecting, publish updates on the amounts that have been paid back, and claw back bonuses from executives who presided over this £13.6bn mis-selling fiasco.
‘The banks should be proactively contacting their customers and making sure it is as easy as possible for those with a legitimate claim to get their money back, without any hassle.’
- Payment protection explained – how payment protection works
- Claim your PPI back – quick and easy way to claim back PPI
- Which? Campaigns guide to PPI – why it is a poor deal for consumers