PPI: Is it about to get worse?

Annoyed woman on the phone
Automated PPI calls: the ultimate passion-killer?
"This debacle has dragged on for years and is not letting up" Gillian Guy, Citizens Advice
  • | by Kristian Dando

The payment protection insurance (PPI) scandal has rumbled on for what seems like an eternity. In fact, can anyone remember an age before those automated claimback phone calls imploring you to “PLEASE LISTEN CAREFULLY”?

Well, get set for another potential twist to this unedifying saga. The BBC has reported that some big-name lenders, including Capital One, Lloyds and MBNA, may have been neglecting to pay back penalty fees and charges incurred on cards as a result of paying for PPI, leading to ‘dramatic’ reductions in what wronged customers actually get. The total figure? As much as £1bn, experts claim.

Lloyds issued a statement this morning 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."

The Financial Conduct Authority, the regulator tasked with keeping lenders in check, has not yet endorsed the BBC’s £1bn figure.

However, former banker-turned journalist Cliff D’arcy (he presumably made the career switch for the money) has been doing some calculations, and he reckons the £1bn figure is just about right. “When I got deeper into the numbers I realised the scale of this problem," he said. "It's because banks were charging very high penalty fees, very high rates of interest on borrowing and some of these claims go back decades. So it just compounds and multiplies to a very big number."

“Pick and choose”

There has, understandably, been uproar about this latest instalment of the PPI farce.

Citizens Advice chief executive Gillian Guy said: “Firms should not be short-changing people on their PPI pay-out. It's not for banks or credit card companies to pick and choose what they provide compensation for. If people have been mis-sold they deserve a full pay-out which covers all of their losses.

“This is yet more evidence of banks and card providers' utter failure to put things right for PPI customers. This debacle has dragged on for years and is not letting up. The delay in addressing the issue of mis-sold PPI has meant up to £5bn of people's compensation has ended up in the hands of claims management companies. Firms need to end this scandal once and for all by making sure all those who have been mis-sold get the money they deserve.”

“Nuisance”

So, back to those nuisance calls. With potentially more PPI money out there, it’s a matter of time before innumerable claims companies start angling to get it back for customers – for a cut, of course.

With grim inevitability, this will lead to more irritating automated “IMPORTANT MESSAGES” interrupting Coronation Street.

Luckily, communications watchdog Ofcom has issued advice for households who have been plagued by nuisance calls, via the medium of a handy video.

Claudio Pollack, Ofcom’s consumer group director, said: “Empowering as many consumers as possible with the knowledge to help protect themselves against nuisance calls and messages is a key priority for Ofcom.

“Our latest research helps us better understand the root causes of nuisance calls and tackle the problem more effectively. While progress is being made, we are under no illusions that there is still more work to do. Together with government, other regulators, consumer groups and charities, we’re exploring all possible ways of better protecting consumers.”