It forecast banks spending an additional £22bn on payouts despite already shelling out £23bn. Banks made £44bn they made from PPI between 1990 and 2012.
Banks will end up paying more in payment protection insurance compensation than they made from the product according to a prediction from the Professional Financial Claims Association.
It forecast banks spending an additional £22bn onpayouts despite already shelling out £23bn. Banks made £44bn from PPI between 1990 and 2012.
Nick Baxter, chairman of the PFCA, reckoned around 75% of PPI was missold.
He said: “The perception is we are near the end of the PPI scandal because £23bn has been paid out, but because 50% of what’s been paid out is interest we’re nowhere near the end of this – we’re not even half way through it.”
The Financial Conduct Authority is proposing putting in a 2018 deadline on making new PPI complaints and there is the suggestion that the number of complaints will accelerate ahead of the deadline.
But Baxter thought there’s a good chance that deadline will be altered, while he doubted more people will claim per month because many still don’t know they’ve got a PPI policy.
Indeed, he thought a disgraceful number of customers will be denied from claiming if the 2018 deadline comes to pass.
He added: “Banks think the 2018 time limit is a done deal but I think the FCA will look at it a bit more deeply than that because there would be a lot of people left out in the cold.
“The problem with PPI is it’s not like any other product since there are people with PPI who still don’t know they’ve got it.
“It would therefore be wrong to say to a customer it’s too late because of an artificial time limit.
“A simple answer is to make institutions write to everyone that has it, although I’m not sure how practical a road that is to go down.”
Baxter estimated that 70% of PPI claims rejected by banks are then overturned by the Financial Ombudsman Service, although with some banks this stands as high as 90%.
On the flipside he was happy the FCA will take charge of claims management companies, which he said should eliminate the nuisance element of the industry and streamline the complaints process for wronged customers.
