Bank payouts on rise
BANKS paid nearly £2billion in compensation last year to settle claims from misselling payment protection insurance.
City watchdog the Financial Services Authority said the £1.9billion figure included £441million in December – the largest monthly sum so far. Banks paid £379million in November, meaning payouts rose every month since April, except for September.
Consumers took PPI to help repay loans if they suffered long-term illness or lost their jobs but a misselling scandal emerged.
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Some customers found they bought a policy without realising they did not need it, or felt pressured to do so. The British Bankers’ Association accepted a court ruling that PPI misselling could be applied retrospectively, leaving three million people in line for compensation.
Banks paid nearly £2billion in compensation last year
Banks have earmarked an estimated £7.6billion for compensation but based on an average 30 per cent fee it could be worth over £2billion to claims firms.
Watchdog Which? said £1.9billion was only a quarter of what lenders expected to refund. It urged banks to do more to speed up redress and help people avoid using claims managers.