By Mark Fairlie.
The PPI fraud that the banks perpetrated on British consumers over nearly three decades has turned into a fraud that millions of British consumers are now perpetrating on the banks with bogus claims, according to Barclays chairman, John MacFarlane, reports the Guardian.
Seeming to suggest it was part of a wider government conspiracy to force banks to pump money to homeowners struggling for a decade against below-inflation wage rises, he said that the PPI compensation scheme was “stimulation of the economy by buying flat-screen televisions”. He told the Mail on Sunday that the percentage of fraudulent claims was “enormous”, that the Government was “complicit” in the decline of the City of London, and that it was almost “inconceivable” that £50bn worth of PPI was mis-sold.
According to the Financial Conduct Authority, the City and bank watchdog, 60 million PPI policies were sold which have since resulted in 20m complaints. Banks themselves have been fined on multiple occasions for not handling customers’ claims correctly and that 60%+ of PPI cases referred to the Financial Ombudsman result in a win for the consumer.
Payment protection insurance was designed to cover consumers’ repayments on loans, mortgages, and credit cards if they fell ill, were made redundant, or died. The first policies were sold in the 1970s but the market reached its peak in the 1990s and 2000s.
The Financial Conduct Authority’s predecessor ruled that many PPI policies had been mis-sold and they set up a mechanism for people to claim their repayments back in full plus compensation and interest on top.
The deadline for making claims against financial institutions ends on 29th August 2019.
According to the Guardian, banks have already paid out £30bn in compensation. In July 2018, Barclays blamed PPI for its significantly lower profits (BBC) and in August 2018, Lloyds put aside an additional £460m for PPI compensation (BBC).
In July 2018, according to the BBC, consumers who were not mis-sold PPI may be able to claim all of the sales commission paid out on a policy they bought plus interest.
In October 2017, the banks were told to follow the “Plevin” ruling where, if the level of commission on a policy was more than 50% of a customer’s PPI payment, they could claim anything above that in compensation. According to the Financial Conduct Authority, the average level of commission received by banks from PPI insurers was 67%.
Reaction to the Barclay chairman’s comments was not favourable.
Speaking to BM Magazine, Adam French, consumer rights expert at Which? described the comment as a “slap in the face” for ripped-off consumers, commenting that the banks still have much to do to restore customer trust in the sector.
In an interview for the same article, Gillian Guy, Citizens’ Advice CEO, said that PPI policies were “regularly mis-sold…expensive…and poorly designed”. She said that the industry was “paying the price for (its) inaction” when problems first surfaced with the product.
MoneySavingExpert Martyn Lewis commented on BBC Radio 5 live and reported on his website that
“(t)his was a fraud on one of the biggest scales in the UK and not one banker has been prosecuted for it…I think the man should have kept his mouth shut”.