PPI News

The question “Have I Got PPI?” is not an easy one to answer. For years, banks and other credit providers were systematically mis-selling payment protection insurance (PPI) or adding it to customers´ credit agreements without their knowledge. This means that you could have PPI – and been paying premiums on it for years – and be entitled to a refund of your premiums plus statutory interest of 8% since first being accepted for credit.

Not everybody is entitled to compensation for being mis-sold PPI but, if you have made a large purchase on credit, taken out a loan, a store card or credit card within the last decade, the likelihood is that you probably are.

There are two ways to find out “Have I Got PPI”. You can either: 1. review all your previous credit agreements (assuming you still have the paperwork), write to all your credit providers, write to the Financial Services Ombudsman when your credit provider randomly rejects your claim (which they do), write to the Financial Conduct Authority when the your credit provider “miscalculates” your refund of PPI (which they do), or 2. use our one-click/one-call service to find out “Have I Got PPI” and have one of our experienced financial claims advisors manage a claim for a PPI refund on your behalf.

Our service is entirely confidential, does not obligate you to proceed with a claim for a PPI refund and, if your claim is unsuccessful, will not cost you a penny. Find out “Have I Got PPI” today, and start the process for reclaiming the compensation to which you are legally entitled.

Fund to Pay Lloyds PPI Compensation Claims Increased by £1.4 Billion

August 4, 2015

The fund to pay Lloyds PPI compensation claims increased by £1.4 billion in the last quarter, and there could be more to come according to group´s CEO.

With the latest addition to the fund to pay Lloyds PPI compensation claims, the Lloyds Banking Group has now allocated £13.4 billion pounds for the mis-selling of PPI – more than half the total provision of the entire UK banking industry.

Describing the additional provision as “disappointing”, the group´s CEO – Antonio Horta-Osario – admitted that the situation could get worse before it gets better, and that shareholders could expect the group to allocate a further £1 billion pounds this year – and £2 billion more in 2016 – to cover the volume of Lloyds PPI compensation claims.

More than 1.2 million Lloyds PPI compensation claims are being re-assessed following the Financial Conduct Authority´s £117 million fine for the group´s failings in fairly assessing customers´ claims, and millions more are expected following the Supreme Court´s verdict in Plevin –v- Paragon Personal Finance. The specialist securities firm Cenkos has forecast that the verdict in “Plevin” could cost the Lloyds Banking Group £10 billion.

One of the reasons that the provision to pay Lloyds PPI compensation claims is so much higher than provisions made by other financial institutions is that the banking group sold sixteen million PPI policies in the UK from 2000. Claims against 45 percent of these policies have now been settled but – judging by the addition to the fund to pay Lloyds PPI compensation claims – the volume that claims are being received is not decreasing as fast as the group expected.

Also revealed in the group´s first half report was the volume at which branches of the Lloyds Banking Group mis-sold packaged bank accounts. The group set aside £175 million to pay compensation for mis-sold packaged bank accounts during the first half of the year. This figure is also expected to increase as claims volumes escalate based on the provisions put aside by Lloyds High Street competitors. The RBS Group allocated £300 million to pay compensation for mis-sold packaged bank accounts, while Barclays put aside £200 million.

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Settlement of Credit Card PPI Compensation Claims is a “Lottery”

July 20, 2015

The settlement of credit card PPI compensation claims is a “lottery” according to a personal finance expert who appeared recently on the BBC´s Moneybox program.

Listeners to Radio 4´s Moneybox program recently heard personal finance expert Jonquil Lowe allege that the settlement of credit card PPI compensation claims “is becoming a bit of a lottery” due to two different methodologies used to calculate compensation settlements when credit card holders pay off their monthly balances in their entirety.

Ms Lowe said that both methodologies are supposed to return the credit card holders to the financial position they would have been in had payment protection insurance not been mis-sold to them. However, the way in which certain credit card companies settle credit card PPI compensation claims means that consumers could receive different amounts depending on the issuer of their credit card.

Explaining the difference between the two methodologies, Ms Lowe said that when settlements of credit card PPI compensation claims are calculated, the consumer´s credit card history is reconstructed. Premiums paid for the mis-sold insurance policy are removed, as are any fees and charges that have been triggered by the premiums. Interest charged on the premiums, fees and charges is included in the calculations and 8% is added to the total amount for statutory interest.

She continued to explain that once all the premiums, fees, charges and interest are removed, the recalculated balance due each month is lower. Consequently, when credit card holders have paid off their balances in full, they have effectively overpaid the credit card issuer. When this happens, High Street banks regard the overpayments as temporary credits to be used against future spending; and, when they calculate settlements of credit card PPI compensation claims, High Street banks include the overpayments in their compensation settlements.

However, when certain other issuers calculate the settlement of credit card PPI compensation claims, overpayments are regarded as permanent loans and therefore not included in their compensation settlements – thus reducing the value of the customer´s refund and creating a scenario in which two credit card customers may have paid the same amount in premiums and charges for PPI, but the customer who got their credit card from a High Street bank receives significantly more compensation than the customer whose credit provider uses the latter method of calculating PPI compensation.

The two credit providers specifically identified as using the latter method to calculate the settlement of credit card PPI compensation claims were MBNA and Capitol One. However, there may be several other credit providers also using this method for calculating settlements of credit card PPI compensation claims. Customers are advised to check their offers of compensation carefully, or call our claims helpline and have your settlement checked accurately by one of our experienced claims advisors.

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Settlements of PPI Compensation Claims up Year-on-Year

July 15, 2015

The latest data released by the Financial Conduct Authority reveals that settlements of PPI compensation claims have increased by almost £100 million in 2015.

Ever since January 2011, the Financial Conduct Authority (FCA) has maintained a database of how much is refunded to the public in settlements of PPI compensation claims. The latest addition to the database reveals that in May £390.4 million was refunded to the public banks and other credit providers.

The settlements of PPI compensation claims paid in May brings the total amount PPI refunded to the public so far in 2015 to £1.985 billion – almost £100 million more than was paid during the first five months of 2014 (£1.886 billion) – and brings the total amount paid out in settlements of PPI compensation claims since the FCA started its database to more than £20 billion.

The year-on-year increase in settlements of PPI compensation claims implies that the volume of complaints about PPI is not declining as quickly as was forecast; although some of the increase could be attributable to the re-assessment of previously under-settled Lloyds PPI claims as ordered by the FCA, or a higher percentage of disputes being upheld in favour of the consumer by the Financial Ombudsman Service.

The Ombudsman is due to release its first half year report shortly. The report will give some insight into the reasons behind the increased value of settlements of PPI compensation claims and how many unresolved PPI cases still require investigation. In January this year, the Ombudsman acknowledged that there was a backlog of 280,000 PPI cases to be resolved and that new cases may take up to eighteen months to resolve because of their increasing complexity.

There was some good news regarding the PPI complaints procedure last week, when it was announced that the FCA had approved the Ombudsman´s application for certification under the “Alternative Dispute Resolution (ADR)” directive. Once the certification as an ADR takes effect in July 2017, the Ombudsman will have to resolve future PPI cases within a ninety day period.

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FCA Fines Lloyds for Failure to Settle PPI Claims Fairly

June 5, 2015

The Financial Conduct Authority has issued its biggest ever fine of £117 million for the Lloyds Banking Group´s failure to settle PPI claims fairly.

The record fine of £117,430,600 was issued against the Lloyds Banking Group following an investigation into the way in which Lloyds claims handlers handled complaints from customers that had been mis-sold payment protection insurance.

The investigation by the Financial Conduct Authority (FCA) covered the failure to settle PPI claims fairly between 5th March 2012 and 28th May 2013, during which time the “complaint uphold rate” – the percentage of PPI complaints that are settled in customers´ favour – fell from 82 percent to 26 percent.

The FCA´s investigators attributed the decline in upheld complaints to guidelines being issued to claims handlers that stipulated Lloyds´ PPI sales processes were compliant unless proved otherwise. This “overriding principle” resulted in more than 850,000 claims from customers being rejected without proper investigations being conducted.

Claims handlers were also told to make only “reasonable attempts” to contact customers when further information was required to conclude investigations. If claims handlers were unable to contact customers for more evidence to support their PPI claims, the company line was that the customer had failed to meet their “burden of proof” and the PPI claims were rejected.

Lloyds´ failure to settle PPI claims fairly was exacerbated by the banking group omitting to inform claims handlers about known failings in the sale of payment protection insurance. These failings included the failure of sales advisors to assess a customer´s suitability for PPI, the automatic inclusion of PPI in online loan quotes, and the faking of PPI agreements in order to meet sales targets.

Due to Lloyds´ failure to settle PPI claims fairly, some customers whose PPI claims were rejected were incorrectly informed that their complaint had been “fully investigated” with “appropriate weight and balanced consideration to all available evidence”. Other customers were offered “ex gratia” payments, rather than receiving their full entitlement to PPI compensation.

Speaking about Lloyds´ failure to settle PPI claims fairly and the £117 million fine, Georgina Philippou – the FCA´s Acting Director of Enforcement and Market Oversight – said: “The size of the fine today reflects the fact that so many complaints were mishandled by Lloyds.  Customers who had already been treated unfairly once by being mis-sold PPI were treated unfairly a second time and denied the redress they were owed. Lloyds’ conduct was unacceptable.”

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Supreme Court Rules on Claim for the Failure to Disclose PPI Commission

May 27, 2015

The Supreme Court has made a landmark ruling in a claim for the failure to disclose PPI commission that could have implications for millions of credit consumers.

In 2006, Susan Plevin took out a £34,000 personal loan to consolidate her existing financial arrangements and was sold a PPI policy for £5,780 – the single premium for which was added to the amount of the personal loan. The personal loan and the PPI policy were both arranged with Paragon Personal Finance through a broker – LLP Processing (UK) Ltd.

Of the £5,780 that was added to the loan for the PPI premium, only £1,720 was paid to the under-writers of the policy (Norwich Union). Paragon Personal Finance kept £2,280 in commission for themselves and LLP Processing (UK) Ltd were paid £1,870 in commission for brokering the sale.

In 2010, Susan made a claim for being mis-sold PPI on the grounds that the PPI policy was only for five years whereas the personal loan was for ten years. As LLP Processing (UK) Ltd had gone out of business by 2010, Susan received a token £3,000 compensation from the Financial Services Compensation Scheme.

Having paid five years of interest on the premium for the PPI policy, Susan was dissatisfied with her token compensation. She sued Paragon Personal Finance and made a claim for the failure to disclose PPI commission – alleging that she would never have agreed to purchase the PPI policy if she had been made aware that 71.8 percent of the premium was going to be retained as commission.

Her case was heard at the Manchester County Court, where judges ruled that Paragon Personal Finance and LLP Processing (UK) Ltd had fulfilled their obligations with regard to commission payments. Susan appealed to the Court of Appeal, who found that by informing Susan on the paperwork that a commission was involved, Paragon was in compliance with the Insurance Conduct of Business Rules.

Susan pursued her claim for the failure to disclose PPI commission and took her case to the Supreme Court – where judges ruled that, under the Credit Consumer Act 1974, it was unfair for Susan to be charged such high a high percentage of commission without her knowledge. The judges agreed that Susan had purchased the PPI policy without having given her informed consent.

Handing down the landmark ruling, Lord Sumption said: “A sufficiently extreme inequality of knowledge and understanding is a classic source of unfairness in any relationship between a creditor and a non-commercial debtor. Any reasonable person in her position who was told that more than two thirds of the premium was going to intermediaries, would be bound to question whether the insurance represented value for money, and whether it was a sensible transaction to enter into. The fact that she was left in ignorance in my opinion made the relationship unfair.”

Susan´s case will now return to the Manchester County Court for reconsideration. The possible outcomes are a discharge of her loan in addition to a refund of her PPI premium plus interest, as under §140A of the Credit Consumer Act, Manchester County Court has the discretionary power to reduce or discharge a personal loan when it is established that the relationship between the debtor (in this case Susan) and the creditor (Paragon Personal Finance) is unfair.

The Implications of the Claim for the Failure to Disclose PPI Commission

The implications of the Supreme Court´s verdict in Plevin –v- Paragon Personal Finance is that millions of credit consumers will now be able to claim compensation if they were sold a PPI policy without being told how much of their payment(s) was being retained in commission.

Many credit providers received enhanced commissions for selling payment protection policies; and, if the level of commission was not disclosed at the time of the sale, it could be considered to have created an unfair relationship between the credit provider and the credit consumer.

The verdict of the Supreme Court reverses a previous ruling by the Court of Appeal (Harrison –vs- Black Horse Ltd) that said the failure to disclose commission levels did not constitute a breach of the Credit Consumer Act 1974 – a ruling which has often been used by claims handlers to reject PPI compensation claims made on the grounds that PPI was a bad-value product.

The verdict should also encourage credit consumers who have previously had their claims rejected to re-apply for PPI compensation. However, as making a claim for the failure to disclose PPI compensation is likely to result in the claim being contested, it is in consumers´ best interests to seek professional legal advice before contacting their credit provider.

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Disputes about PPI Decisions Continue at an “Alarming Rate”

May 22, 2015

Disputes about PPI decisions are continuing at an “alarming rate” according to the Financial Ombudsman Service´s 2014/2015 Annual Review.

The Financial Ombudsman Service is an independent arbitrator that investigates disputes between financial institutions are their customers. The Service has been much used to resolve disputes about PPI decisions since the start of the PPI scandal, finding in favour of the customer more than 50 percent of the time.

The Service has just published its Annual review for 2014/2015, which clearly shows that disputes about PPI decisions are continuing on a massive scale. In the period April 2014 to March 2015, the Financial Ombudsman Service received 204,943 new complaints about the way in which PPI claims had been handled by credit providers.

In the Annual Review, the high rate at which the Service is receiving disputes about PPI decisions is partly attributed to claims management companies making claims on customers´ behalf and then automatically disputing the decisions when the claim is rejected. Nonetheless, the Annual review says that more than half of these disputes about PPI decisions are still resolved in the customer´s favour.

Disputes about PPI decision account for 63% of the Ombudsman´s workload, and although this represents a significant drop from three years ago, the Service is still accepting new enquiries at the rate of 560 per day.

Of particular concern is the number of complaints relating to “comparative redress” – where customers are offered a refund relating to the difference in cost between an unsuitable (usually single-premium) PPI policy, and what they would have paid for an alternative policy that the bank thinks would have been more appropriate for them.

The Ombudsman has to check every “appropriate” policy to decide whether it agrees or disagrees with the banks´ decisions, and then inform each customer what the bank has done because comparative redress is not often clearly explained. Due to cases such as these the Financial Ombudsman Service still has a substantial number of complaints to investigate.

Chief Ombudsman Caroline Wayman said: “The world has moved on and changed significantly since I first joined the Ombudsman as an adjudicator in 2001. Yet our workload over the last 15 years has been constantly dominated by the past – clearing up the fall-out of the mass claims and mis-selling scandals of the last decade and a half.”

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Increase in PPI Refund Payments Refutes S&P Prediction

May 15, 2015

The latest data released by the Financial Conduct Authority (FCA) shows that PPI refund payments have increased year-on-year for the third month in a row.

On the FCA´s website, the city watchdog maintains a table indicating how much has been paid in PPI refund payments each month by banks and other credit providers. The table has just been updated to include the PPI refund payments for February 2015, and the data shows – for the third month in a row – that monthly PPI refund payments are higher than the corresponding period twelve months ago.

The figure for February 2015 – £361 million – is a 9.5% increase on the £329.5 million that was paid in PPI refund payments in February 2014. The percentage increase is similar to the rise in PPI refund payments seen in January 2015 (£424.5 million from £389.2 million) and follows the 26% year-on-year increase in PPI refund payments made in December 2014.

The rise in PPI refund payments does not necessarily mean that more claims for PPI refunds are being received by credit providers – just that more claims are being settled. It is possible that banks and other credit providers are treating their customers more fairly than before – when many customers had to complain to the Financial Ombudsman Service to recover their full entitlement of PPI compensation.

Until the Financial Ombudsman Service produces its H1 report for 2015, the reason for the rise in PPI refund payments can only be a cause for speculation. However, the upward trend in PPI refund payments refutes a prediction by the ratings agency Standard & Poor that “the worst period for PPI provisions has now passed”.

The rating agency´s prediction came in a report forecasting how much the four leading banking groups may still have to allocate to pay for past “mistakes”. Since 2010, Barclays and the Lloyds, HSBC and RBS Banking Groups have paid out more than £42 billion in fines, charges and redress – not only for the mis-selling of PPI, but also for the mis-selling of interest rate products, LIBOR rigging, and the manipulation of foreign exchange markets.

Standard & Poor predicted that the four banking groups would allocate a further £19 billion before the end of 2016 to pay for their previous wrong-doings – a prediction that was followed by the announcements that Barclays was setting aside £800 million to pay fines for foreign exchange manipulation and £150 million for PPI refund payments, while the RBS Group and the HSBC Group have both increased their provision for PPI refund payments by £100 million.

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Clydesdale Bank PPI Compensation Claims to be Reinvestigated

April 14, 2015

All Clydesdale Bank PPI compensation claims handled prior to August 2014 are to be reinvestigated under the orders of the Financial Conduct Authority.

The Financial Conduct Authority (FCA) ordered a reinvestigation of the Clydesdale Bank PPI compensation claims after discovering that the bank implemented “inappropriate policies” for the handling of customer complaints, and then misled the Financial Ombudsman Service with falsified data when customers appealed the banks´ decisions.

The investigation into the handling of PPI compensation claims by Clydesdale Bank revealed that claims for PPI refunds on mortgages and loans were automatically rejected when the credit agreements had expired more than seven years prior to the claim being made. This was due to the Clydesdale Bank having a seven year document retention policy, and – even though the documents needed to resolve the claims still existed – customers were told they were beyond the time limit to make Clydesdale Bank PPI compensation claims.

The FCA´s investigation also revealed that a team within the Clydesdale Bank tampered with system printouts to falsify PPI-related information when records were requested by the Financial Ombudsman Service to resolve appeals to the independent arbitrator. This deceit was also applied to Clydesdale Bank PPI compensation claims relating to mis-sold PPI on credit cards, after claims handlers chose to ignore any records held by the bank prior to 2000.

It was also identified that claims handlers were failing to identify cases in which the PPI policy was unsuitable for the customer, and deficiencies in the training and monitoring of claims handlers was also found. Overall, the FCA believes that 42,200 Clydesdale Bank PPI compensation claims were unfairly rejected and a further 50,900 claims were settled for less compensation than the customer was entitled to.

As a result of the Clydesdale Bank´s “inappropriate policies”, the FCA issued the bank with a fine of £29,540,500 and ordered that all Clydesdale Bank PPI compensation claims handled prior to August 2014 were reinvestigated. Georgina Philippou – the Acting Director of Enforcement and Market Oversight at the FCA said:

”Clydesdale’s failings were unacceptable and fell well below the standard the FCA expects. The fact that Clydesdale misled the Financial Ombudsman by providing false information about the information it held is particularly serious and this is reflected in the size of the fine. We have been very clear about how firms should treat customers who may have been mis-sold PPI. In ignoring documents it held which were relevant to its customers’ complaints, Clydesdale failed to treat its customers fairly.”

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Financial Conduct Authority Identifies Declining Number of PPI Complaints

April 1, 2015

The Financial Conduct Authority has identified a 14% fall in the number of PPI complaints received by credit providers during the second half of 2014.

Financial institutions that receive in excess of five hundred complaints within a six month period are required by the Financial Conduct Authority (FCA) to publish statistics on their websites relating to the number and the nature of the complaints. The FCA then collates the numbers to monitor how many complaints are being received by each financial institution and to what financial product(s) they relate.

Since 2011/2, the numbers collated by the FCA have been dominated by complaints about payment protection insurance. However, in the latest available data for the second half of 2014, the number of PPI complaints has seen a significant decline of 14% – the first time since late 2011 that the number of PPI complaints has accounted for less than 50 percent of the total number of complaints

Despite this decline in the number of PPI complaints, more than one million complaints were made by customers of the leading banking groups about their products and services – with units of the Lloyds Banking Group maintaining first and second place on the list of the most complained about financial institutions in the UK (figures in brackets relate to complaints about all insurance products):

  1. Lloyds Bank– (183,652)
  2. Bank of Scotland– (179,250)
  3. Barclays Bank – (157,822)
  4. MBNA– (95,217)
  5. HSBC – (76,968)

Speaking about the fall in the number of PPI complaints, Christopher Woolard – the FCA’s Director of Strategy and Competition – said: “Today’s statistics offer a mixed picture. When you take PPI out of the equation, complaints are still on the up. So, while the overall decreases we have seen should be welcomed there is still more for financial services firms to do. The FCA’s challenge to those firms is to put the necessary measures in place to ensure we see a consistent fall across all sectors.”

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Ombudsman Receiving More Complex Complaints about PPI

February 22, 2015

The Financial Ombudsman Service has reported that, despite a lower volume of new investigations, it is receiving more complex complaints about PPI.

According to the Ombudsman´s second half report for 2014, PPI-related complaint account for nearly two-thirds of the arbitrators work, and despite a fall in volume from 133,000 complaints in the first half of the year to 105,000 complaint between July and December 2014, the Financial Services Ombudsman is receiving more complex complaints about PPI.

Writing in the report, Chief Ombudsman Caroline Wayman said that the complex complaints about PPI were “becoming more hard-fought”, although the report revealed a high level of success. 82 percent of PPI complaints made against specific units of the Lloyds Banking Group were upheld in the customer´s favour during the second half of 2014, while 68 percent of the PPI complaints made against Barclays Bank PLC were also resolved in favour of the customer.

Despite the trend for more complex complaints about PPI, the Financial Ombudsman Service achieved significant uphold percentages against a number of other financial institutions. The uphold rate for PPI claims against HFC Bank (part of the HSBC Group) was an impressive 83 percent, and the independent arbitrator found in favour of the customer in 74 percent of PPI claims against Citibank, and in 60 percent of PPI claims against Capital One Credit.

As has become the norm, the Lloyds Banking Group and Barclays Bank PLC were identified as Britain´s most complained about financial institutions in the Ombudsman´s half-yearly report. According to data available on the Financial Ombudsman Service´s website, more than 36,000 of the PPI complaints received between the second half of the year (from a total of 105,000) were made against the Lloyds Banking Group, while 15,877 complaints were made about the service provided by Barclays Bank PLC.

Other financial institutions responsible for more complex complaints about PPI included the HSBC Group (9,740 complaints), the RBS Group (6,914 complaints), Capital One (6,289 complaints) and the Santander Group (3,917 complaints).

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Procedures for Claiming PPI Compensation to be Reviewed

January 30, 2015

The Financial Conduct Authority has announced a review of the procedures for claiming PPI compensation to ensure they are meeting their objectives.

The current procedures for claiming PPI compensation have two objectives – to ensure that credit customers receive their full entitlement to compensation for being mis-sold PPI and to restore the reputation of the financial system in the UK.

Since 2011, the Financial Conduct Authority (FCA) has overseen the procedures for claiming PPI compensation, and the city watchdog has announced that they are going to be reviewed to determine whether or not they are meeting their objectives or need changing.

Measures being considered include a consumer awareness campaign to advise credit customers about their rights to claim PPI compensation, the introduction of time limits on PPI compensation claims and other changes to the current procedures for claiming PPI compensation.

While the review takes place, banks and other credit providers have been told to continue using the existing procedures for handling customer complaints until the conclusions from the review are unveiled in the summer.

The FCA has overseen more than 14 million PPI-related complaints from credit customers since 2011, while banks have paid out more than £17.3 billion in compensation since the FCA started keeping records. The latest data published by the FCA relating to October 2014 indicates another slight increase in the amounts of PPI compensation being paid each month:

January £389.2m
February £329.5m
March £349.8m
April £410.3m
May £407.4m
June £390.3m
July £383.2m
August £312.8m
September £353.8m
October £375.6m

From this data it would appear that there is a long way to go before the PPI mis-selling scandal draws to a close. Only last month, Caroline Wayman – the Chief Ombudsman – commented she expects her department to be “dealing with the fallout from PPI for several years yet”.

Ms Wayman revealed that the Financial Ombudsman Service is still receiving in excess of 4,000 complaints each week from customers who have not had a satisfactory resolution to their grievance through the current procedures for claiming PPI compensation.

The Ombudsman has a backlog of over 280,000 PPI-related complaints – more than half of which are expected to be upheld in the customer´s favour. This would imply that the current procedures for claiming PPI compensation are not meeting the objective of restoring the reputation of the financial system in the UK.

It will be interesting to see what conclusions are made by the FCA when its review of the current procedures for claiming PPI compensation is concluded.

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Timescale Announced for Refunds of Mis-Sold Credit Card Protection Policies

January 27, 2015

The Financial Conduct Authority (FCA) has announced a timescale for refunds of mis-sold credit card protection policies starting at the end of the month.

More than two million credit card customers have been sold credit card protection policies since 2005. The policies – which offer protection against the fraudulent use of a credit card if it is lost or stolen – are considered “worthless” by the FCA, as they duplicate the protection already offered by the credit card provider.

After reaching an agreement with the banks and other credit providers to refund customers with the premiums they paid for the fake protection (often up to £25.00 per year), the FCA has announced a timescale for refunds of mis-sold credit card protection policies.

From the end of this month, letters from the company handling the refunds of mis-sold credit card protection policies – AI Scheme Limited – will be sent to customers identified as being entitled to a refund. The letters will ask eligible customers to vote on whether they want the refund scheme to proceed as detailed below.

Provided that the majority of eligible customers vote for refunds of mis-sold credit card protection policies, the High Court will be asked in April or May to approve the scheme. When approval is received, AI Scheme Limited will again contact eligible customers with a form to claim a refund of their premiums plus 8% statutory interest as compensation.

As customers complete and return the forms, AI Scheme Limited will distribute the refunds of mis-sold credit card protection policies according to how much is due to each customer. The refunds process is expected to be completed by September or October 2015.

Which Credit Card Protection Policies are Eligible for Refunds?

The mis-sold credit card protection policies were marketed under the names of Sentinel, and Safe and Secure Plus. They were also directly available through Affinion International Limited. More recognisable retailer bank and credit providers that sold the credit card protection policies that are eligible for refunds include:

  • AIB Group (UK) Plc including First Trust Bank and Allied Irish Bank
  • Barclays Bank Plc
  • Capital One (Europe) Plc
  • Clydesdale Bank Plc
  • HSBC Bank Plc
  • Lloyds Bank Plc
  • Northern Bank Limited trading as Danske Bank
  • Santander UK Plc
  • Tesco Personal Finance plc
  • The Co-operative Bank Plc
  • The Royal Bank of Scotland Plc

Tracey McDermott – the FCA´s Director of Supervision and Authorisations – issued the advice that any eligible customer who receives a ballet paper from AI Scheme Limited should vote in favour of refunds of mis-sold credit card protection policies. She said: “If approved, this scheme will provide those who may have concerns about the way their card security product was sold to them with a simple and free way to claim compensation.”

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Complaints about PPI to the Ombudsman will Continue for Years

January 6, 2015

Complaints about PPI to the Ombudsman will continue for years according to the Budget & Planning Report for 2015 released by the Financial Ombudsman Service.

The Budget and Planning Report for 2015 reveals that the number of complaints about PPI to the Ombudsman has fallen from a high of 12,000 per week in 2012 to around 4,000 per week; and that the independent financial disputes arbitrator still has 280,000 complaints outstanding from credit consumers who claim to have been unfairly treated by their credit provider.

Complaints about PPI to the Ombudsman account for 87 percent of the arbitrator´s work and mostly concern unfairly rejected claims for PPI compensation, a failure to deal with claims in a timely manner, or an incorrect calculation of compensation.

Although the arbitrator employed 2,000 extra staff last year to deal with volume of complaints about PPI to the Ombudsman, the service intends employ a further 200 staff during 2015 in order to reduce the backlog of complaints to 180,000 by the end of the year.

Writing in the Budget and Planning Report for 2015, Chief Ombudsman Caroline Wayman commented “As we work through the unprecedented number of PPI cases we have received over the last few years, it is clear that we will be dealing with the fallout of PPI for several years yet”.

Ms Wayman told reporters “Complaints about PPI to the Ombudsman are still the main driver of financial disputes, and although the numbers are declining, it will be years before we can truly say that this mis-selling scandal is over”.

Martin Wheatley – the Chief Executive of the Financial Conduct Authority (FCA) – has said that he expects credit providers who mis-sold PPI to treat PPI compensation claims fairly and pay the correct amount of redress when it is due to customers. In August, the FCA ordered a review of more than 2½ million claims for PPI compensation after it was revealed that credit providers had been unfairly rejecting claims or incorrectly calculating the value of PPI refunds.

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Co-op PPI Claims Partly to Blame for Stress Test Failure

December 16, 2014

The volume of Co-op PPI claims for compensation has been given as one of the reasons for the bank recently failing the Bank of England´s “stress test”.

The Bank of England´s “stress test” is a precautionary risk assessment which indicates how well a bank would cope with a “meltdown” financial scenario in which house prices tumbled, unemployment increased and inflation rose without warning. The assessment was conducted on seven different banks – with the Co-op being the only one not to pass.

The Co-op bank has experienced poor results in recent years. The bank made a loss of £1.3 billion in 2013, followed by a loss of £76 million in the first six months of 2014. The Co-Op Bank is not expected to make an operating profit until 2016.

One of the reasons for the bank´s poor performance was the volume of Co-op PPI claims for compensation made by its customers. Last year, the bank set aside £103 million to cover its liability for Co-op PPI claims and it was also fined by the Financial Conduct Authority (FCA) for unfairly treating more than 1,000 claims for PPI compensation.

At the time, Tracey McDermott – the FCA´s Director of Enforcement and Financial Crime – commented: “Co-op put in place a policy that was likely to lead to complaints not being dealt with properly. While nobody suffered any financial loss, Co-op’s actions meant that a significant number of people had the resolution of their valid complaints delayed for no good reason.”

The bank has also had to put aside some substantial provisions for poor practises other than for Co-op PPI claims. In 2013, the company allocated a provision of £26.1 million for “alleged failings” in referring customers to card protection insurance companies, and a provision of £15 million for “conduct issues incurred but not reported”.

Niall Booker – The Co-op Bank´s Chief Executive – said “We appreciate customers and other stakeholders continue to feel angry about how past failings placed the future of the business so seriously at risk. I would like to apologise to them, to thank them for their continued loyalty and to thank colleagues for their commitment during such difficult times”.

Due to failing the Bank of England´s stress test, the Co-op will be required to submit a revised capital plan to the Prudential Regulation Authority.

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Fund to Claim PPI Compensation from HSBC Grows by 17%

November 4, 2014

A further £353 million has been allocated for customers to claim PPI compensation from HSBC – an increase of 17% on the bank´s existing provision.

The addition to the compensation fund for customers to claim PPI compensation from HSBC is notable due to the proportional increase compared to the bank´s previous provision of £2.1 billion. All the leading banking groups have recently increased their provision to pay PPI refunds, but the HSBC is the only one to announce a double-digit percentage increase in their compensation fund:

  • Not surprisingly the Lloyds Banking Group made the largest single digit percentage increase to their PPI provision – adding £900 million or 9% to its existing fund.
  • Barclays increased its fund for PPI refunds by 4% when putting aside an extra £170 million into its existing provision of £3.53 billion.
  • The RBS Group made the smallest percentage increase in their provision to pay PPI compensation last week – increasing their existing fund by 3% to £3.2 billion.

By comparison, the funds allocated for customers to claim PPI compensation from HSBC represented a 17% increase on the existing fund.  An HSBC spokesperson commented that the size of the additional provision was attributable to an increase in claims for HSBC PPI refunds caused by greater public awareness [of the bank´s role in the scandal].

It is probable that the spokesperson´s comments are correct. Banks such as Lloyds, Barclays and NatWest have been the focus of the news headlines in the financial papers while the HSBC has been largely overlooked. Possibly customers of HSBC may be more carefully scrutinising their credit agreements to see if they are entitled to claim PPI compensation from HSBC.

Despite the big percentage increase, the HSBC PPI compensation fund may have to be topped again in the near future. Recently the Financial Conduct Authority reported it had received 65,865 complaints about how the bank had dealt with claims for PPI refunds in the first half of the year – 23,620 more complaints than were received about the Lloyds Banking Group.

If you are a customer of HSBC, and you entered into a credit agreement with the bank, you may be eligible to claim PPI compensation from HSBC. You are invited to contact our claims advice department and speak with one of our financial claims advisors, who will help you establish if you have a claim for PPI compensation from HSBC which is worth your while to pursue and will guide you through the process of making a claim.

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£100 Million Extra to Claim PPI Refunds from RBS

November 3, 2014

“Higher than expected reactive complaint volumes” have resulted in an extra £100 million being added to the fund for customers to claim PPI refunds from RBS.

The reason for the extra provision to claim PPI refunds from RBS was given in the company´s interim financial statement for Q3. Although likely to relate to NatWest PPI compensation claims rather than those made against the Royal Bank of Scotland and the Ulster Bank, the increase brings the RBS Group´s total provision for PPI compensation to £3.3 billion.

The financial statement also revealed that the RBS Group was fined £2.8 million for poor complaint management by the Financial Conduct Authority (FCA). According to a separate FCA report, 31% of complaints related to the RBS Group failing “to demonstrate a fair outcome for consumers” when they tried to claim PPI refunds from RBS, while 62% of complaints to the RBS Group were not dealt with in an appropriate timeframe.

Despite increasing its provision for PPI compensation by £100 million, the RBS Group announced Q3 profits of £1.27 billion compared with a loss of £634 million for the corresponding quarter in 2013. This is the first time that the RBS Group has recorded a profit for three consecutive quarters since 2008 when the Group of banks was bailed out during the financial crisis.

However there was also a warning to shareholders in the interim financial statement. The company commented that “ongoing conduct and regulatory investigations and litigation continue to present challenges and are expected to be a material drag on both earnings and capital generation over the coming quarters.”

The “ongoing conduct and regulatory investigations” mentioned in the interim financial statement are more than likely to relate to the thousands of customers who have been unsuccessful in their attempts to claim PPI refunds from RBS, and whose complaints are still being investigated by the Financial Services Ombudsman.

The Ombudsman has reported that the “uphold rate” against the RBS Group (the rate at which claims for PPI compensation are upheld after being initially rejected or underpaid by the RBS Group) is approximately 70%. This would imply that the provision for customers to claim PPI compensation from RBS could increase significantly in the future.

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Fund to Pay Barclays PPI Compensation Claims Increased by £170 Million

October 30, 2014

The fund to pay Barclays PPI compensation claims has been increased once again – bringing the bank´s total provision for PPI compensation to £5.02 billion.

Barclays “Interim Management Statement” for the third quarter of the year reveals that the bank put aside a further £170 million to pay Barclays PPI compensation claims – just three months after the provision was increased during the second quarter by £900 million.

The Management Statement also reveals that the bank settled Barclays PPI compensation claims with a value of £291 million between July and September – increasing the total amount paid to customers since records were first properly maintained in 2011 to £3.8 billion.

According to the third quarter report, the bank is anticipating a decrease in the number of Barclays PPI compensation claims, which should also result in a reduction in the cost of employing claims handlers and running claims centres.

Industry experts have observed that the total provision for Barclays PPI compensation claims is now £5.02 billion and that only £3.8 billion has been refunded to date – implying there is more than £1.2 billion still available for customers who were mis-sold payment protection insurance by Barclays to claim compensation. There are two possible explanations for this sizable discrepancy:

Earlier this year, the Financial Conduct Authority (FCA) reported that there had been 278,426 complaints about Barclays´ banking practices during the first half of the year – more complaints than for any other financial institution. According to the FCA´s press release, 70% of the complaints related to Barclays PPI compensation claims.

The second possible explanation is that the Financial Ombudsman Service also has a significant number of outstanding investigations related to Barclays PPI compensation claims. Many of the bank´s customers have complained that their claims were unjustifiably rejected or that Barclays underpaid the compensation owed to them.

Elsewhere in the Management Statement, a provision of £160 million has been allocated towards paying fines and redress for interest rate hedging, and a further provision of £500 million has been allocated for the bank´s alleged rigging of Forex markets. Despite these extra provisions for alleged unfair banking practices, Barclays recorded a 4 percent increase in pre-tax profits to £1.22 billion.

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More Funds to Reclaim PPI Compensation from Lloyds

October 28, 2014

An extra £900 million has been allocated for customers to reclaim PPI compensation from Lloyds Banking Group due to an increase in the number of claims.

The extra £900 million added to the company´s provision for mis-selling PPI to more than £11 billion – and the fund for customers to reclaim PPI compensation from Lloyds could expand further after the Lloyds Banking Group were found to be unjustifiably dismissing claims for PPI refunds by the Financial Conduct Authority.

Lloyds has also been exposed for using a “comparative redress” repayment method to underpay PPI refunds to its customers that were mis-sold single premium PPI policies before the practise was stopped in 2009, and for omitting to include charges triggered by PPI premiums when the premiums on mis-sold PPI policies took customers beyond their borrowing limits.

A spokesman for the Lloyds Banking Group said that the extra £900 million for customers to reclaim PPI compensation from Lloyds was due to the continued high volume of claims being received. He said that the number of claims received by the company had increased by 3% in the first six months of 2014 to 264,115 compared to the second half of 2013.

The Lloyds Banking Group has also confirmed that it is to shut 200 branches throughout the UK throughout the next three years. This is despite a commitment to the government that it would keep the same levels of service as when it was bailed out by the taxpayer in 2008. The closure of the 200 branches is expected to cause the loss of 9,000 jobs.

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PPI Complaints to the Ombudsman Upheld in Nearly Two-Thirds of Cases

September 2, 2014

According to a report from the Financial Ombudsman Service, PPI complaints to the Ombudsman are being upheld in nearly two-thirds of cases.

The latest half-yearly report from the Financial Ombudsman Service reveals that PPI complaints to the Ombudsman – most often about the unfair rejection of PPI claims – are running at “significant levels” and are being upheld in the customer´s favour in 64 percent of the cases investigated by the independent arbitrator.

Overall there was a 30 percent decrease in the number of PPI complaints to the Ombudsman during the first half of the year when compared with the last six months of 2013 – 133,819 complaints compared to 193,054 complaints – but once again the Lloyds Banking Group was the most complained about financial institution in the UK.

In the first six months of the year, the were 26,209 PPI complaints to the Ombudsman from customers of Lloyds Bank PLC (formerly Lloyds TSB), 24,134 PPI-related complaints from customers of the Bank of Scotland and more than 2,500 PPI complaints to the Ombudsman from customers of other units within the Lloyds Banking Group.

Complaints against the Lloyds Banking Group accounted for almost 40 percent of the disputed PPI decisions received by the Ombudsman during the six month period covered by the report, and it was significant to note that 73 percent of disputes involving customers of Lloyds Bank Plc were resolved in favour of the customer – bringing the overall percentage of upheld PPI complaints to the Ombudsman to 64 percent.

Chief Ombudsman, Caroline Wayman, said: “Responsibility for sorting out the mass mis-sale of PPI is still the major part of the Ombudsman’s workload. But during the first half of 2014 there’s been a marked change in the type of complaints consumers are asking us to resolve – as underlying attitudes become more entrenched and the issues involved get more complex”.

She continued: “We’re seeing more and more people turn to us in frustration where they feel their bank or insurer simply doesn’t understand or really care. And we’re hearing growing dissatisfaction from people about being processed industrially as a number rather than being listened to as an individual customer”.

Ms Wayman added that the volume of PPI complaints to the Ombudsman could be reduced if financial institutions communicated their decisions to their customers with more clarity. She said that by giving their customers more thoughtful and considerate responses, financial institutions could sort out their customers´ grievances at an earlier stage and prevent disputed PPI decisions being escalated to the Ombudsman.

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FCA Orders Review of PPI Settlements

August 29, 2014

The Financial Conduct Authority has ordered a review of PPI settlements from 2012/13 to ensure that proper redress was made to customers.

Following several recent allegations that claims for PPI compensation were unjustifiably rejected, miscalculated and underpaid, the Financial Conduct Authority (FCA) has ordered a review of PPI settlements affecting more than two and a half million PPI claims from 2012 and 2013.

The aim of the review is to ensure that the claims were handled correctly and that the correct amount of compensation was paid to customers after an article appeared in the Times claiming that a significant number of claims for PPI refunds were randomly rejected. The undercover reporter was told during his training as a claims handler that claimants would often not pursue their claims once they claim had been rejected.

More recent allegations include PPI miscalculations uncovered by BBC investigators – in which credit providers failed to include charges that were triggered by insurance premiums in their calculations of refunds, and the “comparative redress” method used by the Lloyds Banking Group (and possibly others) to underpay customers who were sold a PPI policy with a single premium.

The review of PPI settlements is also a reaction to the large number of complaints made to the Financial Services Ombudsman which are upheld once investigated. Currently more than two-thirds of complaints to the Ombudsman result in banks´ decisions being overturned – confirming the FCA´s impression that the banks are rejecting or undersettling claims without good reason.

Martin Wheatley – the Chief Executive Officer at the FCA – commented that the review of PPI settlements was a “positive move”. He said that the review of previously rejected claims and underpaid settlements was “an important step in rebuilding trust in financial institutions”. The PPI mis-selling outrage is unprecedented in the financial industry, and Mr Wheatley acknowledged that “there have been some issues along the way”.

Depending on the outcome of the review of PPI settlements, further reviews may be necessary in the future. Credit consumers who have had their PPI claims unjustifiably rejected or underpaid should be sent an advice through the post informing that their claim is being investigated and the outcome of the review. If you made a claim for PPI refund during 2012 or 213, and you do not receive an advice from the FCA, you should contact our claims advice department for instructions on what you should do next.

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Lloyds Increases Funds for PPI Reclaims to £10.4 Billion

July 31, 2014

The Lloyds Banking Group increased its funds for PPI reclaims to £10.4 billion during the last quarter with the addition of an extra £600 million provision.

According to the Financial Conduct Authority´s second quarter PPI report, all five major banking groups have increased their funds for PPI reclaims; with the Lloyds Banking Group (£600 million) and Barclays (£900 million) increasing the size of their funds the most.

The Financial Conduct Authority´s second quarter PPI report also shows that, since 2011 – when the Authority first started monitoring PPI reclaims – more than £15.5 billion has been paid back to customers who were mis-sold PPI. The report forecasts that the current volume of reclaims (c. £400 million per month) will continue for some time, and speculates that the total funds for PPI reclaims will soon exceed £20 billion.

The Financial Conduct Authority´s speculation is likely based on the volume of complaints still waiting to be resolved by the Financial Services Ombudsman and on the fact that a significant number of customers are yet to make a claim for PPI compensation. A spokesperson for the Lloyds Banking Group issued a statement that a slower than expected decline in the number of PPI claims was to blame for increasing the Group´s funds for PPI reclaims to beyond £10 billion.

The increases in funds for PPI reclaims reported in the Financial Conduct Authority´s report include:

  • Lloyds Banking Group – up £600 million to £10.4 billion
  • Barclays – an increase of £900 million to £4.85 billion.
  • RBS/NatWest – a further £150 million to £3.25 billion.
  • HSBC – added a further £50 million to £2.1 billion.
  • Santander – expected to add £65 million to the existing funds for PPI reclaims of £761 million.

The Financial Conduct Authority´s report also states that claims for PPI refunds against the Lloyds Banking Group – the worst culprit in the PPI mis-selling scandal – are running at 70% of 2013 levels, confirming the spokesperson´s statement.

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PPI Miscalculations Common among Leading Banks

June 15, 2014

The BBC has discovered that PPI miscalculations are common among the leading banks and credit card companies – and always in their favour.

According to investigators from BBC´s “You and Yours” radio program, banks and credit card companies have been failing to include charges on clients´ credit accounts that were triggered by a PPI premium taking the account beyond its borrowing limit. The researchers claim that the PPI miscalculations are a deliberate act by the credit providers to save them refunding millions of pounds to their customers.

The investigators reviewed the processes for calculating PPI refunds at Lloyds, Barclays, MBNA and Capital One – all who were guilty of PPI miscalculations – and the radio program included in its broadcast one example in which an MBNA customer had incurred more than £600 in charges due to PPI premiums which were not taken into account in his compensation settlement. The customer originally received a PPI refund of £5,800 when the correct amount of his refund should have been more than £13,000 once compound interest was included.

Commenting on the findings of the BBC program, Caroline Wayman – the Principle Financial Services Ombudsman – said that under the rules for PPI compensation, “If a fee is the result of the mis-sold PPI, it should be given back, and if it’s not included in the amount [of the compensation], that would be a mistake.” She added “Any widespread failure to carry out proper calculations would most definitely be disappointing”.

Several other examples of PPI miscalculations were included in the broadcast, and a leading financial claims expert – Cliff D´Arcy – estimated that the total amount saved by the credit providers approached £1 billion. He said that the figure was so high because when a credit customer exceeds their borrowing limit, the fees charged by the credit providers – and the interest charged on the fees – are excessive.

Representatives of the credit providers accused of PPI miscalculations declined to appear on the program; however Lloyds Banking Group provided a statement which read “When a customer lets us know that they may have incurred other costs because of their PPI policy, we will investigate and make an appropriate refund.”

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Lloyds Banking Group Found to be Underpaying PPI Refunds

March 31, 2014

The Lloyds Banking Group has found to be underpaying PPI refunds to its customers after an investigation was conducted by the BBC.

According to the BBC´s researchers, the Lloyds Banking Group has been underpaying PPI refunds to thousands of customers of Lloyds TSB, the Halifax Bank and the Bank of Scotland by using a method of repayment known as “comparative redress”.

The repayment method has been applied to refunds of PPI for customers who were mis-sold “single premium” PPI before the sale of the product was halted in 2009 and what Lloyds were found to be doing was refunding the difference between the single premium paid and the cost of a comparative monthly premium insurance product.

The repayment method makes the assumption that the monthly premium insurance product would have been appropriate for the customer at the time, and – according to the BBC´s researchers – the Lloyds Banking Group is saving tens of millions of pounds by underpaying PPI refunds.

Calling the repayment method “a scandal within a scandal”, the BBC reports that single premium PPI was judged to be unfair to consumers in 2005; but the Lloyds Banking Group continued to sell the product to its customers until 2009 – frequently adding the cost of the single premium to the finance that was being borrowed in order that the bank could charge interest on it.

A spokesman from the Lloyds Banking Group denied that they were underpaying PPI refunds and explained that the bank´s customers chose to purchase single premium PPI because that was all that was available at the time. The spokesman claimed that, had a monthly premium product been available, the customers would probably have chosen the cheaper option.

Customers of Lloyds can complain to the Financial Services Ombudsman or call our claims advice department if they feel that they have been a victim of Lloyds underpaying PPI refunds. It is likely that your claim for a refund will be recalculated once your claim has been investigated.

It is not known whether credit providers other than the Lloyds Banking Group are also underpaying PPI refunds using this repayment method, and you are welcome to contact us if you think you have not received your full entitlement to PPI compensation.

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HomeServe´s PPI Mis-Selling Results in Record Fine

February 19, 2014

An investigation into the financial operations of Homeserve Membership Ltd has resulted in a record fine for HomeServe´s PPI mis-selling activities.

The Financial Conduct Authority (FCA) conducted an investigation into Homeserve Membership Ltd (“HomeServe”) after receiving a volume of complaints about the company´s financial operations. The FCA discovered that HomeServe – an emergency home repairs company that offers insurance cover and a domestic repairs service throughout the UK – mis-sold payment protection insurance alongside its home emergency insurance product.

According to the FCA´s report, HomeServe´s PPI mis-selling activities targeted its existing database which mainly comprised vulnerable and elderly customers. It was found that HomeServe knowingly mis-sold PPI policies to customers who would not be entitled to the benefits of the policies, and failed to investigate complaints when they were received.

More than 69,000 customers were victims of HomeServe´s PPI mis-selling activities, resulting in the company collecting more than £16.8 million in PPI premiums. Due to the nature of HomeServe´s PPI mis-selling, the FCA imposed a record fine of £30,647,700 and ordered that the premiums that had been collected be returned to customers.

Speaking about the size of the substantial fine for HomeServe´s PPI mis-selling, the FCA’s Director of Enforcement and Financial Crime – Tracey McDermott – said “This is a serious case, one that has warranted our largest retail conduct fine and generated a sizeable bill for consumer redress”.

She continued “HomeServe is another example of a firm that has acted without proper regard for its customers over a long period of time. HomeServe promises to provide customers with peace of mind when things go wrong. In fact the firm’s culture, controls and remuneration structures meant that staff were focused on quantity not quality, and there were customers that paid the price for that”.

The FCA reported that the Board of HomeServe were “insufficiently engaged with compliance maters” and that managers failed to deal with complaints when there was a cost implication due to the company´s profit-driven culture.  The fine also included a financial penalty for an IT problem which caused a number of customers to be charged their PPI premiums twice.

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Lloyds Looks Again at Time Limits for PPI Refunds

February 8, 2014

The Lloyds Banking Group is looking again at implementing time limits for PPI refunds despite opposition from other banking and consumer groups.

The Lloyds Banking Group has so far set aside more than £9 billion in order to refund customers at Lloyds TSB, the Bank of Scotland and the Halifax Bank for the mis-selling of payment protection insurance.

Following the most recent increase in its PPI provision, the Lloyds Banking Group has been in discussions with the Financial Conduct Authority in order to look at setting time limits for PPI refunds so that the banking group can reduce its costs of processing claims and reassure shareholders that its role in the PPI scandal is coming to a close.

Shareholders of the Lloyds Banking Group were informed last month that the Group had increased its PPI provision by a further £1.2 billion after the Financial Conduct Authority had found that all three banks within the Group had been unjustifiably rejecting claims for PPI.

The Financial Conduct Authority – who themselves are opposed to time limits for PPI refunds – has previously stated that if the banking industry wants to introduce time limits for PPI refunds, it will have to embark on a major advertising campaign to raise public awareness of a PPI deadline so that everybody who is entitled to a PPI refund claims within good time.

For this reason, many banks are opposed to time limits for PPI refunds. They say that an advertising campaign to raise public awareness would result in a massive influx of claims which would put further strain on the banks´ claims processors – and the Financial Services Ombudsman when claims are rejected without explanation.

Back in 2013, the Financial Conduct Authority rejected a request by the British Bankers Association to introduce time limits for PPI refunds and there is also strong opposition to the implementation of a PPI deadline from various consumer groups – who do not believe that time limits for PPI refunds are in the best interests of the consumer.

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400,000 Outstanding Complaints about Mis-Sold PPI

January 10, 2014

The Chief Ombudsman has said that the service intends to take on extra staff to cope with more than 400,000 outstanding complaints about mis-sold PPI.

The Financial Services Ombudsman is the independent body which investigates complaints banks or other financial service companies that fail to respond to a claim for a refund of PPI within the allotted time period, unjustifiably reject PPI claims or fail to pay the full amount of PPI compensation.

Two months ago, the Ombudsman reached the milestone of one million complaints about mis-sold PPI PPI and, despite increasing the number of employees allocated to investigating disputes between banks and their clients, there are still more than 400,000 complaints outstanding.

According to the Interim Chief Financial Services Ombudsman – Tony Boorman – the backlog has been caused by the overwhelming volume of complaints about mis-sold PPI. Mr Boorman commented that this nature of complaint often takes longer to resolve than other financial disputes.

During the course of 2013, the Financial Services Ombudsman employed more than a thousand additional staff to cope with the volume of complaints about mis-sold PPI, and Mr Boorman expects that a further thousand employees may be required during next year to help cope with the backlog of unresolved complaints.

The better news for those waiting for their PPI complaints to be investigated is that – by the end of the financial year 2013/14 – the Financial Services Ombudsman expects to have resolved 310,000 complaints about mis-sold PPI – three times as many as were resolved during the 2012/13 financial year.

Mr Boorman commented that the focus of the Financial Services Ombudsman has been to allocate sufficient resources to handle the volume of complaints about mis-sold PPI. He said that although he expects the volume of complaints to decline, the “numbers are still likely to be substantial”. He asked clients to remain patient and he hoped to see an improvement in the cooperation of credit providers in the New Year.

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FCA finds Advisors Mis-Sold Lloyds PPI due to Incentive Failings

December 12, 2013

The Financial Conduct Authority has found that sales advisors mis-sold Lloyds PPI due to serious failings in the company´s incentive program.

An investigation by the Financial Conduct Authority (FCA) has found that Lloyds TSB, the Halifax Bank and the Bank of Scotland – all part of the Lloyds Banking Group – used inadequate systems and controls to monitor the selling of payment protection insurance (PPI), and that inappropriate incentive schemes were introduced with the result that sales advisors mis-sold Lloyds PPI to their customers.

The FCA’s investigation focused on advised sales of investment products (such as share ISAs) and protection products (such as critical illness or income protection) between 1st January 2010 and 31st March 2012. Sales advisors were incentivised through variable base salaries, individual and team bonuses and one-off payments and prizes, or demoted if sales targets were consistently missed.

Due to the pressure to deliver sales, staff systematically mis-sold Lloyds PPI. An internal investigation prior to the one conducted by the FCA found that seven out of ten advisers at Lloyds TSB and three out of ten advisors at the Halifax Bank still received their monthly bonus, even though a high proportion of sales were found to be unsuitable. In one instance, an adviser had mis-sold Lloyds PPI to himself, his wife and a colleague to prevent himself from being demoted.

The FCA´s investigation found further evidence that sales´ advisors mis-sold Lloyds PPI. It was discovered that 229 advisers at Lloyds TSB received a bonus even when all of their assessed sales were deemed unsuitable or potentially unsuitable; and that 30 advisers received a bonus in the same circumstances on more the one occasion. The FCA concluded that the issues arose because the sales managers – who were responsible for ensuring compliant practice by the sales advisers – also had their own performance measured against sales targets.

Commenting on the findings of the investigation, Tracey McDermott, the FCA’s director of enforcement and financial crime, said: “The findings do not make pleasant reading. Financial incentive schemes are an important indicator of what management values and a key influence on the culture of the organisation, so they must be designed with the customer at the heart”

The FCA issued a fine of £28,038,800 to the Lloyds Banking Group for the failings which resulted in mis-sold Lloyds PPI – the second largest fine ever imposed by the FCA on a retail operation.

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Complaints to Ombudsman about PPI Pass One Million Milestone

November 15, 2013

The number of complaints to the Ombudsman about PPI has passed the one million milestone due to 115,247 new complaints about how banks have handled PPI claims being received in the past quarter.

The number of new complaints to the Ombudsman about PPI is actually below what was received in the first three months of the year (132,152), but it brings the total number of complaints received to over one million and leaves the Financial Services Ombudsman on target to beat last year´s total of 378,669.

In the first six months of 2013, the total number of complaints to the Ombudsman about PPI is now 247,399 – a 149 percent increase on the first six months of 2012. Complaints to the Ombudsman about PPI now account for 81 percent of all complaints received by the service.

The reasons for the complaints are generally that credit providers have unjustifiably rejected a claim for PPI compensation, delayed payment of a claim or underpaid the amount of compensation a customer is entitled to. The Ombudsman upheld eight in ten complaints during the first half of the year.

Departing Chief Ombudsman – Natalie Ceeney, who has been in charge of handling complaints about PPI for almost four years – said: “Disappointingly we are still seeing cases where businesses are not following our long-standing approach to PPI, resulting in long waits and unnecessary delays for consumers.”

Speaking about Ms Ceeney´s departure, Nicholas Montagu – Chairman of the Ombudsman Service – said: “Having just received our millionth new PPI complaint, Natalie feels that now is the time for her to move on – as the ombudsman service itself starts out on a new set of challenges, building on the foundations for change laid under Natalie’s leadership.”

The Financial Services Ombudsman has more than trebled in size over the last four years from an annual workload of 150,000 cases to over 500,000 cases, thanks mainly to the tidal wave of complaints to the Ombudsman about PPI. Tony Boorman, deputy chief Ombudsman, will take charge of running the service until further notice.

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FCA Wants Improvement in Handling of PPI Compensation Claims

September 26, 2013

The Financial Conduct Authority has said that there needs to be an improvement in the handling of PPI compensation claims after conducting a review.

The Financial Conduct Authority´s review looked at the claims handling procedures at eighteen unnamed High Street banks and building societies, personal loan companies and credit card providers who, between them, have received more than one million complaints about their handling of PPI compensation claims.

The review found that the claims handling procedures executed by some of the businesses were in line with the Financial Conduct Authority´s expectations, but serious problems existed in the way twelve of the eighteen businesses made their decisions about PPI compensation claims and communicated the decisions to their customers.

The Financial Conduct Authority had asked each of the businesses being reviewed to provide them with a sample of fifty claims in order to assess their handling of PPI compensation claims. Of the fifty claims, forty should be rejected claims, and the remaining ten should be claims that were upheld and compensation paid.

The Financial Conduct Authority reviewed all the samples to see whether employees engaged in the handling of PPI compensation claims were assessing the merits of individual claim against the Authority´s guidelines, whether claims handlers were making appropriate offers of PPI compensation, and whether decisions were explained clearly to customers.

From the twelve businesses that gave the Financial Conduct Authority cause for concern, 60 percent of PPI compensation claims had been unfairly rejected and 43 percent of the claims that had been settled in the customer´s favour were underpaid due to poor practices.

Commenting on the failures found in the handling of PPI compensation claims, Clive Adamson – Director of Supervision at the Financial Conduct Authority – said: “We expect firms to deliver fair outcomes to PPI complainants. In our review, we found that some firms are doing this while it is clear others still have some way to go”.

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Complaints about PPI Decisions made by Banks Set New Record

September 3, 2013

Complaints about PPI decisions made by banks other credit providers have set a new high according to figures released by the Financial Ombudsman Service.

The Financial Ombudsman Service received a record 266,228 complaints about PPI decisions made by banks during the first six months of the year – an increase of 26 percent on the second half of 2012 – making it inevitable that the independent financial disputes arbitrator will have received more than one million PPI-related complaints by the end of the year.

The record volume of complaints about PPI decisions made by banks – mostly relating to unfairly rejected claims, alleged underpayments and delayed payments – accounted for almost nine out of ten complaints about all financial products and services received by the Ombudsman, who are currently upholding seven out of ten PPI-related disputes in favour of the customer once they have been investigated.

The record number of new complaints about PPI decisions made by banks and other credit providers is creating a backlog of complaints at the offices of the Financial Ombudsman Service. The Ombudsman has said that the delay in resolving many of them is being compounded by some banks taking an excessive amount of time to submit the information requested by the Ombudsman to resolve the complaint.

The Chief Ombudsman – Natalie Ceeney – said: “Disappointingly we are still seeing cases where businesses are not following our long-standing approach to PPI, resulting in long waits and unnecessary delays for consumers. But, more positively, we are seeing encouraging signs from some major businesses that are starting to recognise the value of getting things right for their customers – with an increased focus on sorting out problems and concerns as quickly as possible.”

The volume of complaints about PPI decisions made by banks that are being upheld, and the delays in providing the information requested by the Ombudsman, indicate that banks and other credit providers are trying to avoid paying PPI compensation whenever possible. To be sure of receiving your full entitlement to PPI compensation, call our freephone claims helpline today and speak with one of our helpful advisors.

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A Further £1.35 Billion Allocated to Pay Refunds of Barclays PPI

July 3, 2013

A further £1.35 billion has been allocated to pay refunds of Barclays PPI – the bank hoping the latest PPI provision will be the last for eighteen months.

The bank topped up its fund to pay refunds of Barclays PPI after admitting that it considerably underestimated the volumes of complaints from customers or the length of time that it would continue to pay compensation for the mis-selling of payment protection insurance.

The total amount now allocated for to pay refunds of Barclays PPI now stands at £3.95 billion, and bank executives are hoping that this will be the last time it will have to make such a substantial provision for a very long time.

Barclays has already refunded more than £2.3 billion to customers who were mis-sold PPI since records were first maintained by the Financial Conduct Authority in January 2011, and the most recent provision of £1.35 billion is anticipated to cover refunds of Barclays PPI for the next eighteen months.

Barclays issued a statement saying that the bank hopes that it will soon be able to tell the company´s shareholders “that a line can be drawn under the PPI mis-selling scandal” – although, as there is no time limit in place for customers to claim refunds of Barclays PPI, the bank acknowledges that it could still be receiving PPI-related claims in ten years’ time.

The bank is current paying refunds of Barclays PPI at the rate of £85 million per month, and the bank claims to have contacted two-thirds of its customers that are entitled to refunds of PPI. Although the rate of claims for a refund of Barclays PPI has decreased by 46 percent since its peak last May, a corresponding decrease in refunds to customers has been far slower to materialise than first predicted by the bank.

Barclays Chief Executive – Antony Jenkins – commented said that historic PPI claims dating back from the 1980s were partly responsible for keeping Barclays PPI liabilities at such a high level. Mr Jenkins also announced a 17 percent fall in pre-tax profits to £3.6 billion over the first six months of 2013, and that Barclays would be trying to raise £12.8 billion via a rights issue.

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PPI Agreements at Lloyds were Faked Claims Times Reporter

June 11, 2013

A Times reporter has claimed that PPI agreements at Lloyds were faked without their customer´s knowledge so that advisors could reach their sales targets.

The allegation that PPI agreements at Lloyds were faked was made after an undercover reporter from The Times underwent the training and recruitment process to work as a PPI claims handler for Royal Mint Court – one of the largest PPI claims handling units of Lloyds.

As part of the reporter´s induction, he was allegedly informed that some Lloyds sales advisors had faked PPI agreements by ticking the blank “opt-in” box on paperwork for credit after the paperwork had been signed by the customer, and regardless of whether the insurance product was suitable for the customer.

The reporter claims that during his training he was told that all claims for Lloyds PPI compensation should be handled as if the customer had knowingly ticked the “opt-in” box themselves and the fact that PPI agreements at Lloyds were faked should be ignored.

It was also revealed during the induction training that customers did not generally pursue their claim against Lloyds for PPI compensation if the claim was rejected first time around. Although a Lloyds´ spokesperson said this was an isolated incident, he acknowledged that PPI claims handlers at Royal Mint Court were being retrained “in line with our policies and procedures”.

Following the publication of the reporter´s claims that PPI agreements at Lloyds were faked, the banking group conducted an investigation and terminated their agreement with Deloitte to oversee the Royal Mint Court complaints handling unit – preferring a new supplier to retrain the employees.

The Lloyds Banking Group is thought to have sold more than sixteen million PPI policies and there has been a number of issues in handling the volume of complaints it has received. Earlier this year, the Financial Conduct Authority issue the banking group with a £4.3 million fine for failing to pay PPI compensation to its customers in a timely manner, and the banking group has had to put aside £6.8 billion to cover the cost of PPI compensation payments.

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Delayed Payments of Lloyds PPI Compensation Cost the Bank £4.3 Million

February 19, 2013

The Financial Conduct Authority has fined the Lloyds Banking Group £4,315,000 for delayed payments of Lloyds PPI compensation affecting 140,000 customers.

The fine was issued by the Financial Conduct Authority (FCA) for the bank´s failure to make payments of Lloyds PPI compensation within the 28 days allowed after decision letters sent to customers with offers of compensation had been accepted by the customer.

During the period between May 2011 and March 2012, the Lloyds Banking Group sent 582,206 decision letters to customers who agreed to the offer of compensation made by the bank. However, due to a series of failings by the Lloyds Banking Group, nearly a quarter of those who accepted their offers (140,209) received their payments much later.

Following complaints from the bank´s customers, the FCA conducted an investigation and found that 87,000 customers waited more than 45 days before they received their payments of Lloyds PPI compensation, 56,000 customers waited more than 60 days, 29,000 customers waited more than 90 days, and 8,800 more than six months. In addition, 24,589 payments of Lloyds PPI compensation “dropped out of the system”, and were only discovered when customers rung Lloyds to find out what had happened to their compensation.

The situation was exacerbated by Lloyds having no systems in place to fast-track customer payments after they had rung up to complain. In addition, the FCA discovered that:

  • The systems used by Lloyds Banking Group to process payments were incapable of coping with the volumes they had to deal with.
  • Staff employed to handle payments of Lloyds PPI compensation did not have the skills or experience to ensure the process worked properly
  • There were no controls for the reconciliation of PPI refunds or for the Lloyds Banking Group to identify whether payments were being made in a timely manner
  • The Group´s approach to risk management was ineffective when preparing payments of Lloyds PPI compensation to send to its customers.

Tracey McDermott, the FCA´s Director of Enforcement and Financial Crime, said: “The industry let customers down badly in relation to the sale of PPI.  The significant volume of complaints is a product of the Lloyds Banking Group´s own failings and the least customers can now expect is that redress, when it is due, will be paid promptly”.

Ms McDermott continued: “In short, the Lloyds Banking Group´s PPI redress payment systems fell well below the standard the Authority expects, and the size of this fine reflects how seriously we view these breaches. All regulated firms must treat those who complain fairly, and that includes paying redress promptly when it is due”.

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FCA Issues Fine for Late Payment of Co-Op PPI Compensation Claims

January 4, 2013

The Financial Conduct Authority (FCA) has issued a fine of £113,000 for the late payment of Co-Op PPI compensation claims during the recent judicial review.

Prior to the recent judicial review of the British Bankers Association´s legal challenge to the FCA´s procedures for refunding PPI, a letter from the FCA was distributed throughout the banking industry instructing financial institutions that, while the judicial review was in progress, the PPI compensation process should continue as normal.

Despite the threat of enforcement action, the Co-op bank put the assessment of 1,629 Co-Op PPI compensation claims on hold while the review was being heard at the High Court – incorrectly believing that the outcome of the Co-Op PPI compensation claims could not be determined while the judicial review was in progress.

The FCA reviewed the Co-Op PPI compensation claims put on hold by the troubled bank, and found that the outcome of the judicial review would not have affected any customer´s entitlement to compensation. As all of the delayed claims could and should have been processed in a timely manner, The FCA issued the bank with a £113,300 fine and a warning about its future conduct.

Tracey McDermott – the FCA’s Director of Enforcement and Financial Crime, said: “The FCA made it clear that firms must continue to process complaints where possible during the judicial review and we warned that enforcement action could be taken if this was not done.  Despite this warning Co-op put in place a policy that was likely to lead to complaints not being dealt with properly during the legal proceedings”.

She continued: “While nobody suffered any financial loss, the Co-op´s actions meant that a significant number of people had the resolution of their valid complaints delayed for no good reason.  We will continue to take action where we find PPI customers have not been treated fairly.”

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Claims for Lloyds PPI Rejected Unfairly Allege CMCs

October 31, 2012

Several claims management companies have alleged that claims for Lloyds PPI were rejected unfairly and the bank obstructed investigations by the Ombudsman.

The Lloyds Banking Group – comprising of Lloyds TSB, the Halifax Bank and the Bank of Scotland – have sold more than sixteen million PPI policies since 2000 and, despite insisting that “we have a very fair and robust review policy” for customers who complain about their payment protection policies, claims for Lloyds PPI were rejected unfairly according to several claims management companies (CMCs).

The allegations made by the CMCs revolve around that the rate at which the bank is resolving claims for Lloyds PPI – which has fallen significantly since the beginning of the year. The claims companies produced data in support of their allegations which shows the percentage of rejected claims for Lloyds PPI has risen from 20  percent at the beginning of 2011 to current rejection rates of 65 percent for claims against Lloyds TSB and 85 percent for claims against the Halifax Bank and Bank of Scotland.

The same data shows that when rejected claims for Lloyds PPI are appealed to the Financial Ombudsman Service, the Ombudsman upholds the appeals in favour of the customer in 98 percent of claims against Lloyds TSB and 90 percent of claims against the Halifax Bank and Bank of Scotland.

One source was reported as saying: “It appears Lloyds is flouting its obligations as defined by the Financial Services Authority to investigate and resolve PPI complaints properly”. In addition to the allegations that claims for Lloyds PPI were rejected unfairly, the banking group has also been criticised for deliberately obstructing investigations by the Ombudsman by delaying the information requested by the independent arbitrator to resolve appeals.

If you have made claims for Lloyds PPI, and your claim has been rejected, you are invited to contact our claims helpline and discuss your case with an experienced financial claims expert to see if it may be worth appealing the bank´s decision. We cannot guarantee to overturn decisions about claims for Lloyds PPI, but it costs you nothing to find out more.

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FSA Issues Fine for Non-Compliant PPI Sales on Car Purchases

May 3, 2012

The Financial Services Authority (FSA) has fined the UK Car Group Limited £91,000 after identifying non-compliant PPI sales on car purchases.

The UK Car Group Limited had a responsibility to monitor PPI sales on car purchases made by CC Automotive – a company that has a chain of used car supermarkets throughout the UK and which trades under the name of Carcraft. As well as selling second-hand cars, Carcraft also organised credit arrangements – essentially personal loans – to facilitate purchases. In many cases the credit arrangements included PPI.

The credit arrangements were often split between different credit providers for different products – for example a car purchase may be financed through one lender, while the parts and labour guarantee was financed through another. When PPI was sold alongside the credit arrangements, customers could purchase separate PPI policies to cover each of the separate credit arrangements.

The FSA investigated compliance levels at UK Car Group Limited, and discovered that the company had failed to take reasonable steps to ensure the suitability of advice given to Carcraft´s customers. The FSA found that the advice given to customers about PPI on car sales fell short of its standards – in particular the standards the FSA expects of firms using appointed representatives.

The FSA said that Carcraft had a responsibility to ensure their customers fully understood the arrangements they were agreeing to – both in terms of the personal loans they were undertaking and the PPI sales on car purchases. The company also had to ensure that its own internal records were properly maintained to include details of the financial advice being provided to customers.

The FSA reported “clear and detailed concerns” about Carcraft’s own internal audits; and, although The UK Car Group Limited took a number of steps to address the FSA´s concerns – such as providing Carcraft´s salesmen with one on one feedback and training – Carcraft continued to conduct PPI sales on car purchases in a non-compliant manner – meaning that customers were at risk of receiving unsuitable advice.

Since being issued with a £91,000 fine for non-compliant PPI sales on car purchases, the UK Car Group has ceased selling PPI and refunded any customers the insurance product was mis-sold to.

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Provision for Lloyds PPI Refunds Increased to £3.5 Billion

May 1, 2012

The Chief Executive of the Lloyds Banking Group has announced that the provision for Lloyds PPI refunds has been increased by £375 million to £3.5 billion.

Delivering the quarterly report for the first three months of the year, the Lloyds Banking Group´s CEO – Antonio Horta-Osorio – warned of a difficult recovery for the UK economy. He announced that the banking group´s profits had fallen by 9 percent during the first quarter and blamed the state of the UK´s economy for contributing to the decline in the bank´s fortunes.

Mr Horta-Osorio also announced that the provision for Lloyds PPI refunds had been increased by a further £375 million – bringing the total provision for the mis-selling of PPI to more than £3.5 billion – and claimed that the reason for the additional provision was a higher-than-anticipated volume of claims. The Chief Executive said that the bank would continue to monitor its position closely with regard to Lloyds PPI refunds.

Commenting on a quarterly decrease in profits from £316 million at the end of 2011 to £288 million during the first quarter of 2012, the Chief Executive continued: “Although our results reflected the subdued UK economic environment, the actions we have taken to further reduce costs, strengthen the balance sheet and reduce risk, and the additional investment we have made in our core franchise, are mitigating these effects and will position us well for future growth.”

PPI, or payment protection insurance, is intended to cover repayments on credit agreements in the event that a customer is unable to work or loses their job. The product was marketed as a consumer-friendly financial product, but mis-sold to millions of Lloyds customers over more than a decade. The major banks and credit card providers are expected to compensate consumers more than £6 billion, having to date paid £3 billion according to the latest data from the Financial Services Authority (FSA).

This time last year, the Lloyds Banking Group withdrew from a legal challenge against the FSA, who wanted financial institutions to pay retrospective compensation for the mis-selling of PPI. The banking group set aside £3.2 billion to pay Lloyds PPI refunds mis-sold under the brand names of Lloyds TSB, Halifax Bank and Bank of Scotland.

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£215 Million Paid in PPI Refunds and Compensation since January

August 30, 2011

Figures released by the Financial Services Authority show that £215 million has been paid in PPI refunds and compensation since the beginning of the year.

Earlier this year, the High Court conducted a judicial review of how claims for PPI refunds and compensation should be handled and dismissed an appeal by the British Banking Association against the Financial Services Authority´s proposals.

The High Court found that the city watchdog´s proposals were correct in stipulating that PPI refunds and compensation should be paid up to six years in arrears, since when there has been a substantial increase in the number of claims.

The Financial Services Authority has been monitoring the amounts paid each month in PPI refunds and compensation since January, and the figures for the first half of the year have just been released:

  • January – £29 million
  • February – £31 million
  • March – £28 million
  • April – £25 million
  • May – £37 million
  • June – £65 million

The substantial increase in PPI refunds and compensation can be attributed to many banks and credit providers putting a hold on the processing of PPI claims while the judicial review was in progress. The increase in PPI refunds and compensation would likely have been more gradual had the PPI claims been processed within the normal timeframe stipulated by the Financial Services Authority.

In total, £215 million in PPI refunds and compensation has been paid during the first six months of the year; and Margaret Cole – the Interim Managing Director of the FSA´s Business Unit – commented that the substantial increase in PPI refunds and compensation paid in June did not surprise her. She expects the amounts to increase each month as banks and credit providers clear their backlog of PPI claims.

She added: “The treatment of PPI complainants has left an indelible stain on the financial industry’s record. By releasing these figures we’re providing a useful measure of firms’ progress that can be tracked on an ongoing basis. We remain 100 percent committed to ensuring that where consumers were mis-sold PPI they will receive the appropriate redress from firms, and we are monitoring firms’ progress to ensure this is done properly.”

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Three Banks Given More Time to Clear Backlog of PPI Claims

June 14, 2011

Three banks, that put customer complaints on hold during a recent judicial review, have been given more time to clear their backlog of PPI claims.  

Under the rules of the Financial Services Authority (FSA), financial institutions are allowed eight weeks to process PPI compensation claims. During the recent judicial review of the FSA´s new guidelines for handling PPI compensation claims, several banks and credit providers put customer complaints on hold waiting for the outcome of the legal challenge.

This hold on customer complaints resulted in a backlog of PPI claims developing at Barclays, Lloyds and HSBC; and the three banks appealed to the FSA for more time to process the customer complaints. The FSA agreed to the request, but only on the conditions that customers are made aware of the revised schedule and that the FSA is kept informed with the banks´ progress in clearing the backlog of PPI claims.

The revised schedule for the handling of customer complaints and processing of PPI refunds is as follows:

  • PPI complaints put on hold while the judicial review was in progress must be dealt with by the end of August
  • PPI complaints received since the judicial review, but before the end of August, must be attended to within sixteen weeks
  • PPI complaints received from the 1st September until the 31st December 2011 must be attended to with twelve weeks

The FSA expects the backlog of PPI claims to be cleared by the end of the year and for the time to process customer complaints to return to eight weeks from 31st December. This revised schedule only applies to the backlog of PPI claims at Barclays, Lloyds and HSBC – all other credit providers must adhere to the existing eight week time limit to process PPI compensation claims.

Margaret Cole – the FSA´s Interim Managing Director of the Conduct Business Unit – said: “We want to see all PPI claims for compensation dealt with swiftly and appropriately. However some firms are facing a huge backlog and now a surge of new complaints which has created a bottleneck. It is not in the interests of consumers to receive further poor handling of their complaints as a result. This temporary extension means that these firms can process these complaints properly and fairly”.

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£3.2 Billion Budgeted for PPI Claims against the Lloyds Banking Group

May 5, 2011

Such is the anticipated volume of claims for being PPI insurance, that £3.2 billion has been budgeted for PPI claims against the Lloyds Banking Group.

The news of the significant provision for PPI claims against the Lloyds Banking Group accompanied an announcement that the group was withdrawing from a legal challenge to new FSA guidelines for paying PPI compensation retrospectively.

A recently concluded review of the FSA´s guidelines by the Supreme Court returned a verdict in favour of the FSA, and judges said that if the British Banking Association wanted to appeal the verdict, it had until next week to do so.

The Lloyds Banking Group did not wait for the deadline to come before making its decision to withdraw from the legal action, and admitted it was facing a liability of more than £3 billion after conducting an assessment of potential PPI claims against the Lloyds Banking Group.

The taxpayer-backed bank will now begin the process of compensating thousands of customers who have made PPI claims against the Lloyds Banking Group, having previously put the complaints on hold while the judicial review was in progress.

The significant provision made for PPI claims against the Lloyds Banking Group implies that the final PPI compensation bill for the whole financial industry could be much greater than the £4.5 billion originally estimated by the FSA.

Richard Lloyd, Executive Director of the consumer magazine Which? said: “This is great news for the millions of Lloyds customers who have been mis-sold PPI. It’s refreshing to see a bank break ranks from its peers and do the right thing by its customers. The rest of the UK’s banks must now follow suit and draw a line under the great PPI mis-selling scandal by withdrawing their legal challenge of the FSA and proactively reimbursing the millions of customers who were mis-sold PPI.”

The size of the provision to pay PPI claims against the Lloyds Banking Group surprised the City, and caused Lloyds shares to fall by 9 percent. It was also reported that, once the provision was taken into account, the banking group recorded a loss of £3.47 billion for the first three months of the year – compared with a £721 million profit last year.

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