PPI scandal hits £10 billion

Quite a lot of money, yesterday
"PPI is now on course to become the biggest consumer financial scandal of all time." Peter Vicary-Smith, Which?
  • | by Kristian Dando

It’s the financial scandal which rocked the nation and ended up costing Britain’s financial institutions billions, eroding yet more of the public’s severely diminished trust. What’s more, it’s responsible for untold amount of nuisance cold calls from ‘claimback specialists’ which have interrupted the teatimes of millions of consumers.

And now the payment protection insurance debacle is set to become the biggest financial scandal of all time, with HSBC setting aside another £340 million for PPI redress costs, bringing the total provisions across all banks to £10 billion.

Last week Lloyds increased the amount set aside for PPI claims to £4.3 billion, and RBS is also expected to set aside more money when it reports its results this Friday. The total for the five largest banks (HSBC, Lloyds, Barclays, RBS, and Santander) now stands at £8.8 billion. At the end of May 2012, £4.8 billion had been paid out. There is still around £5 billion in mis-sold PPI still to be claimed.

Up to a billion pounds has already gone to claims management companies when people can reclaim their money themselves and keep all of their reclaimed money.

Which? chief executive Peter Vicary-Smith said: "These latest figures from the banks show that PPI is now on course to become the biggest consumer financial scandal of all time, exceeding pensions mis-selling and the endowment mortgage scandal.

"The banks must make it straightforward for people to reclaim PPI themselves, for free, so they don't resort to expensive and unnecessary Claims Management Companies (CMCs). We now need the Government to raise its game too, and toughen up the regulation of unscrupulous CMCs who are exploiting consumers who just want to claim back what is rightfully theirs."