The consumer group ëWhich?í has said that the cost of mis-selling PPI has now amounted to £24.4bn for the top five largest banks in Britain. In recent days, a number of banks have exposed the fact that they have implemented extensions for dealing with various claims for compensation.
The financial ombudsman, who have intervened in a number of the more convoluted cases, have stated that the rate at which claims are being made has not cooled as much as they originally anticipated.
The executive director at ëWhich?í, Richard Lloyd, has commented on this revelation: ìYet again banks are having to set aside more money to cover the staggering PPI mis-selling scandal. All banks need to make it as easy as possible for people to claim back their money so they are not encouraged to use unscrupulous claims management companies.î
A report releasing these banks annual results specifies the amounts that have been set aside for PPI mis-selling. It shows that Lloyds set aside £700 million extra in the last three months of 2014 for compensation which means it allocated £2.2 billion across 2014.
Santander set aside an extra £30million for the last three months of last year, and Barclays allocated £200million for the same period. The total for 2014 amounted to £1.1billion for Barclays.
An institution which is owned in the majority by the taxpayer, RBS, allocated an extra £400million for those same three months, meaning the total spend for the year was at £650 million. For HSBC, the figures were £278million and £624 for the respective periods.
Banks and building societies are able to deal with the more simple cases quite effectively and speedily. The average compensation for claims falls just below £3000.
However, there are a number of archaic and convoluted cases where the financial ombudsman service becomes involved in evidence and data collection. A spokesperson has reported that despite an anticipated reduction in the frequency of these cases, the reality has proved to be quite different.
In fact, the financial ombudsman service has declared that it would be appointing 200 more adjudicators in order to tackle the amount of cases that are being referred to them. PPI claims number two-thirds of all the complaints they dealt with in the latter half of 2014. The hiring of these extra workers will be funded by money accumulated through the ìPPI levyî which was paid by the firms whose cases were referred to the ombudsman.
The chief executive at Lloyds Bank, Antonio Horta-Osorio, has responded to these new figures: ìWe have continued to transform the corporate culture and have completely overhauled the performance and reward framework for our customer-facing colleagues, with performance now predominantly assessed on the basis of customer feedback.î
He went on to argue that it will be done through investment into the digital sphere of their business model. He stated: ìThis transformation will reflect our customersí changing preferences in how they choose to interact with us, providing seamless access through a secure and resilient digital infrastructure.î
ìOver the next three years, we expect the UK financial services industry to undergo an unprecedented rate of change, driven by technology, changing customer behaviour and increasing regulatory requirements at a time when traditional competitorsí strategies converge and new entrants compete for customers.î