PPI payments hit £1.9bn in 2011, says FSA

Jason Billingham says "it was a lot of hard work" to get his PPI money back

Related Stories

Banks paid out £1.9bn in compensation in 2011 for the mis-selling of payment protection insurance, the Financial Services Authority (FSA) has said.

Payouts accelerated towards the end of the year, with a monthly record total of £441m paid in December.

PPI was supposed to repay people's loans if their income dropped because they fell ill or lost their jobs, but thousands were mis-sold the policies.

The figures are supplied to the FSA by 19 unnamed firms.

These firms account for the vast majority of PPI cases.

Delays

Typically, successful claimants receive more than £2,750 in compensation, although some have received much bigger sums.

Most are paid compensation because they would never have been able to claim on the policy, or they were unaware that they did not have to buy the policy when they got the loan.

Start Quote

Claims management companies take a significant part of the possible payout and are no more likely to make a successful claim than consumers can on their own”

End Quote

After losing a High Court test case in April, banks were told to deal with 200,000 complaints which they had put on hold pending the hearing's outcome.

Further complaints that have come in since, which means the final bill for banks could reach £8bn.

Consumer groups have called on these institutions to get through the list of compensation payments quicker.

"There is too much putting off responses, too many delays for many, many people trying to get their money back for something they should never have been sold in the first place," said Richard Lloyd of the consumers' association Which?.

However, payments have picked up from £268m in October, and £379m in November.

Claims firms

Consumer groups have also been expressing caution to those considering making a bid for PPI compensation through claims management companies.

The Financial Ombudsman Service, which independently assesses disputes between financial institutions and consumers, estimated that eight out of 10 PPI complaints were currently being brought by claims management companies.

These firms have been sending text messages and taking out advertisements on the television, encouraging people to make a claim, although they take a cut of up to 25% of the payout.

People can make a claim on their own - through bodies such as the statutory compensation scheme, the Financial Services Compensation Scheme (FSCS).

"Claims management companies take a significant part of the possible payout and are no more likely to make a successful claim than consumers can on their own," said Mark Neale, chief executive of the FSCS.

"People can save thousands by submitting their claims directly to the FSCS, rather than through a third party. While it may seem reassuring to have someone else do the paperwork, consumers should not be daunted by the process of making a claim."

The FOS currently receives around 1,000 new PPI complaints every day. In total, it has received about 300,000 complaints, primarily sold by banks and attached to credit cards and loans

It upholds around three out of four cases in the consumer's favour, telling the business to pay compensation.

Barclays, which has set aside £1bn to cover mis-selling claims, issued figures on Wednesday showing PPI fuelled a 67% jump in the number of complaints in its general insurance and protection business to 122,922 in the second half of 2011 compared with the first half of the year.

However, it said complaints in the banking category had dropped sharply.

Do you believe you were mis-sold PPI? Send us your stories using the form below.

If you are happy to be contacted by a BBC journalist please leave a telephone number that we can contact you on. In some cases a selection of your comments will be published, displaying your name as you provide it and location, unless you state otherwise. Your contact details will never be published. When sending us pictures, video or eyewitness accounts at no time should you endanger yourself or others, take any unnecessary risks or infringe any laws. Please ensure you have read the terms and conditions.

Terms and conditions

More on This Story

Related Stories

The BBC is not responsible for the content of external Internet sites

More Business stories

RSS

Features

  • chocolate cake and strawberriesTrick your tongue

    Would this dessert taste different on a black plate?


  • Duke and Duchess of Cambridge and Prince George leaving New Zealand'Great ambassadors'

    How New Zealand reacted to William, Kate - and George


  • Major Power Failure ident on BBC2Going live

    Why BBC Two's launch was not all right on the night


  • Front display of radio Strange echoes

    The mysterious 'numbers stations' left over from the Cold War era


  • A letter from a Somali refugee to a Syrian child'Be a star'

    Children's uplifting letters of hope to homeless Syrians


BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.