Banks will miss PPI compensation deadlines, says PPI Claims Company
Tens of thousands of bank customers due to receive refunds and compensation for mis-sold payment protection insurance (PPI) haven’t seen a penny of it before Christmas, despite assurances that the banks would have dealt with their backlogs by the end of December 2011, says PPI Claims Company, Writeoffloan.
United Kingdom (PRUnderground) December 27th, 2011
The big banks are being accused of dragging their heels over settling complaints and making payments, even though they are required by the Financial Services Authority to employ much more rigorous complaints handling procedures. Some customers have been waiting a year or more for their claims to be handled for being sold over-priced and useless PPI.
The biggest culprits of the lengthiest delays have been identified as Lloyds, Barclays and Royal Bank of Scotland, with Lloyds and Barclays in particular guilty of repeatedly promising customers that money will be in their accounts with nothing subsequently materialising.
The FSA has allowed Lloyds, Barclays and RBS extra time to settle accounts in the past, but some accuse the banks of using the time to add lengthy delays for no good reasons other than being unwilling to pay out and hoping claimants will give up. All this will end in January 2012, when the FSA has ruled that all complaints relating to PPI must be dealt with within eight weeks.
Eric Leenders, Executive Director of Retail Banking at the British Banker’s Association, is mindful however of the logistical challenges the banks are trying to deal with while they tackle more than one million complaints made in 2011 in addition to older cases that pre-date FSA rulings. “There is no doubting the volumes are very large and banks have had to build substantial resources very quickly,” said Mr Landers.
A spokesperson for Mis Sold PPI Claims Company Writeoffloan, said: “The fact that people are still waiting for their cases to be settled after months, in some cases even years, is a disgrace. The FSA is about to bring in new regulations in January to force banks to deal with claims within eight weeks, but if by some miracle the banks manage to do that there is every possibility it will only be for new cases and claims that have been languishing for a long time are unlikely to be paid any time soon.
“PPI is supposed to be a helpful means of covering repayments on loans and credit cards if the worst happened and you lose your job due to illness or redundancy. Unfortunately, when the banks realised what a money-spinner it was they got carried away and this is the result. Tens of thousands of people having insurance policies forced upon them to get the loans and credit cards they needed, even if the insurance would never pay out due to their circumstances. In some cases, customers didn’t even know that the insurance was being added to the loan and it was either hidden in the paperwork or left off it completely.”
To add insult to injury, it recently emerged that some of the banks have destroyed their PPI paperwork. Again Lloyds appears to be the biggest offender: “We are only obliged to keep records for up to six years,” said a Lloyds spokesperson. “In these cases we offer an average redress value of £1,200 and encourage the customer if they hold any records showing the actual premium paid to send it to us.
“The vast majority [of customers] are receiving PPI payments within our target of 28 days, with less than five per cent affected by delays. We apologise and have allotted additional resources to clearing these cases and we are working our way through them as fast as we can. We are calculating PPI refunds with appropriate interest to ensure these customers are compensated for the additional delay.”
Part of the lengthy delay may have been due to the high profile court case that the banks brought to challenge the FSA when it attempted to force them to compensate the customers involved. All the banks let their caseload of complaints build up while waiting for the outcome of the court case, which as it turns out, found against the banks.
“Even if the banks do get through the backlog, there will still be a mountain of work going through the FSA as customers whose claims have been rejected go to it for adjudication,” said the spokesperson. “The FSA may be looking at over 100,000 complaints referred to them in the coming year alone. We are a very long way from seeing justice being done for the tens of thousands of people who are still waiting.”