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PPI Payouts to reach up to £100bn

The Financial Conduct Authority (FCA) said on Monday that payouts totalled £260m in May alone, the highest monthly value since June 2016. Since 2011, £27.4bn has been paid out to customers.

Many more claims are expected, potentially adding billions to payouts. Banks have set aside around £40bn to deal with PPI claims, with both Lloyds and Barclays last month increasing their provisions by £1bn and £700m respectively.

Banks face added pressure later this month when the FCA kicks off an advertising campaign encouraging customers to claim PPI compensation, two years before the final deadline for claims. The £42.2m scheme, which is being funded by lenders, is due to kick off on 29 August.

It is estimated that only one in four PPI claims has been lodged so far. Nick Baxter, chairman of the Professional Financial Claims Association (PFCA), calculates that around £50bn of PPI was mis-sold and that, because of interest, the cost to banks would be up to £100bn if it was all claimed. This would mean that less than 30 per cent has so far been paid out.

 

Barclays sets aside extra £700m for PPI claims

Bank makes pre-tax profit of £2.3bn in first six months of the year, but is hit by loss on sale of part of its African business

Barclays has set aside extra £700m for the payment protection insurance mis-selling scandal and revealed it has taken a loss on the sale of part of its African business.

The bank reported profits for the first six months of the year of £2.3bn, up 13%, but the accounting treatment of the sale of its African arm resulted in a £1.2bn loss for shareholders.

The additional provision for PPI mis-selling takes Barclays’ total bill to £9.1bn and follows the move by Lloyds Banking Group on Thursday to increase its PPI provisions, taking its total to £18.1bn.

Lloyds TSB adds a huge 1 BILLION to its PPI claims bill

Lloyds Banking Group has taken a fresh £1.6bn hit in the first six months of the year to cope with a new wave of claims from consumers missold payment protection insurance and to rectify treatment of mistreated mortgage customers.

The figure includes an additional £1bn charge for PPI – a scandal that has now cost the bank £18.1bn since it first started taking provisions in 2011.

António Horta-Osório, the bank’s chief executive, acknowledged that the costs marred what he described as “an important day for Lloyds” as it is the first set of results since the government sold off all its shares after the 2008 bailout.

As the bank reported a 4% rise in first half profits to £2.5bn, Horta-Osório also said the bank would always incur costs for redress to customers as a cost of doing business.

In addition to the £1bn PPI charge, the bank set aside another £540m in the first half. This includes a previously announced £100m for compensating customers hit by the HBOS Reading fraud for which two former employees were jailed in February and other issues, including the misselling of packaged bank accounts – where insurance and other products are bundled into current accounts – and compensating customers whose mortgage arrears were mishandled.

Lloyds to add ANOTHER £400m to it’s mis-sold PPI bill on Thursday.

Lloyds Banking Group will take ­another hit from payment protection insurance mis-selling this week, taking its bill for the scandal close to £18bn.

The firm, which has already racked up the biggest PPI compensation costs of any British bank, is expected to set aside a further £400m when it posts first-half profits on Thursday.

A day later, Barclays is poised to slump into the red when it unveils a £1.2bn loss from the recent sale of a stake in its African operations.

In March, the Financial Conduct Authority fixed an August 2019 deadline for aggrieved customers to file complaints over PPI. That was longer than the City expected and prompted Lloyds to book a £350m provision, taking its total for the scandal to almost £17.4bn since 2011. Since then the volume of PPI claims has been higher than anticipated, raising expectations that Lloyds will be forced to earmark more money for compensation.

It will dent Lloyds’s pre-tax profits, which analysts expect to rise 17pc to almost £2.9bn. Lloyds has found it difficult to put the mis-selling scandal ­behind it. Last October, following ­another £1bn hit, George Culmer, the finance chief, said he hoped it would be “the last big PPI provision”.

Barclays is also expected to swing to a first-half net loss, from a £1.1bn attributable profit a year earlier, following the sale of a 33.7pc stake in its African arm. Excluding the Africa deal, analysts expect pre-tax profits to rise to around £2.9bn compared to almost £2.1bn in 2016.

PPI — millions of people can still claim compensation

Payment Protection Insurance is the gift that keeps on giving. Hundreds of thousands of new claimants will soon join the queue for PPI compensation if the financial regulator gets its way.

It is estimated that between 45m and 60m PPI policies were sold over the past 30 years — during which there have been a staggering 18.4m complaints.

By the end of March 2017, banks and finance companies had paid out more than £26bn in compensation. Now the Financial Conduct Authority is set to launch a campaign to encourage those people who are “unsure” whether they had PPI insurance to make a claim before the official deadline in August 2019.

So could you have unwittingly been mis-sold one? It is hard to understand how anyone can be unsure about whether or not they had this expensive cover for repayments on loans, mortgages or credit cards in case income was lost through illness or unemployment. But you may have been unaware that the policy was hidden inside the product you bought.

Many of our clients had taken out a loan for a car, to pay off debts, or to go on. Many of these loans were taken out over 20 years ago. It doesn’t matter if your lender was a respectable high street bank — at the time, they all had a considerable form for PPI.

We aim to get back all your premiums and 8 per cent interest, dating back to when the policy was sold. Over 10 or 20 years, this really adds up.

It doesn’t matter if you cannot locate any paperwork, we can do this for you as part of the claim.

To see if you have an eligible claim, call us on 01202 835111.

Barclays sued by US firm over PPI misselling for £1.6bn

Barclays is being sued for £1.6 billion in damages for payment protection insurance (PPI) misselling by a US credit card company that bought a sub-prime lending business from the bank in 2007.

The claim, lodged at the high court yesterday, was from CCUK Finance, the British subsidiary of a firm formerly known as CompuCredit that bought former Barclays division Monument for £390 million just over a decade ago.

The deal included an indemnity clause on misselling of PPI and since then, Barclays has paid out over £8 billion in compensation for widespread PPI misselling, some of which was to Monument customers.

Barclays said: ‘Over the last 10 years we have operated within the parameters of the deal agreed with CompuCredit and believe their recent claims against us are baseless and without merit.  We will be vigorously defending our position.’

PPI complaints continue to flood in at Ombudsman

Fresh complaints about the mis-selling of payment protection insurance (PPI) continue to dominate the workload of the Financial Ombudsman Service.

The ombudsman received an extra 43,000 PPI complaints between July and September after banks rejected their customers’ claims for compensation.

More than half of the PPI complaints during the quarter – 57% – continued to be upheld in favour of the customers.

Packaged bank accounts were the second most complained-about financial policy.

However the number of those, at just 5,317 during the quarter, trailed far behind PPI, which still accounts for more than half the problems with which the ombudsman has to deal.

Costly scandal

The figures highlight yet again what a huge problem PPI compensation has become for the UK’s banks, as the complaints continue to flood in.

It has been calculated by the think tank New City Agenda that just over £40bn has now been set aside by banks to pay compensation to customers who were mis-sold the insurance polices in the first place, and to employ thousands of extra staff to process the subsequent complaints.

Bill for PPI mis-selling scandal tops £40bn

Move by Barclays to set aside extra £600m further inflates already huge cost of UK mis-selling scandal to banking sector
Banks and financial services companies have racked up more than £40bn in costs to handle the payment protection insurance scandal.

The costliest mis-selling bill in UK financial services history became even more expensive on Thursday after Barclays set aside a further £600m to handle the cost of claims.

Data compiled by the thinkthank New City Agenda shows that this top up for Barclays has pushed the total provisions incurred by the industry to £40.2bn. Lloyds Banking Group makes up £17bn of that total.

The size of the payouts have already been cited as a reason for booming car sales and holidays. As one penny off income tax costs about £4bn, it could be regarded as a boost to household income.

Not all the money has gone straight into consumers’ pockets. The latest data from the Financial Conduct Authority shows that from January 2011 – when claims started to be made – until the end of July about £25bn had been distributed by the banks and other firms which sold PPI.

Barclays sets aside another £600m for PPI claims

Barclays has set aside an extra £600m to meet claims for mis-selling of payment protection insurance (PPI).

It brings the bank’s total provision for PPI claims to £8.4bn.

One reason for the increase is the extended deadline for PPI claims, which can now be made until June 2019. On Wednesday, Lloyds announced it was putting aside an extra £1bn

Barclays also reported a 35% rise in third-quarter profits, boosted by its investment banking business.

For the three months to the end of September, pre-tax profits were £837m.

Barclays’ investment banking profits were up 40% compared with the same time last year. US investment banks generally, including Morgan Stanley and Goldman Sachs, have been reporting strong figures as they benefited from an increase in bond trading.

Barclays also earns most of its investment banking revenues in the US and they have been boosted by the weaker pound.

Lloyds set aside yet another £1bn for PPI mis-selling

Lloyds Banking Group has set aside a further £1bn to pay compensation for mis-sold payment protection insurance (PPI).

The extra provision was expected after the deadline for PPI claims was extended to June 2019

The announcement came as the bank announced that pre-tax profits for the three months to the end of September fell 15% to £811m.

Total income for the quarter rose by 1% to £4.27bn.

Lloyds is 9% state-owned, but earlier this month the government said it was scrapping plans to sell its remaining shares in the bank to members of the public.

It is now planning to sell its shares via a “trading plan”, with small tranches of shares sold to institutional investors.

The extra provision for PPI claims comes on top of the £16bn Lloyds has already set aside to tackle PPI mis-selling. It is the bank worst affected by the PPI mis-selling scandal.

Lloyds cashpointsImage copyrightPA

In the third quarter, Lloyds also took a charge of £150m to cover the cost of other “conduct issues” – mostly related to the sale of packaged bank accounts.

Underlying profit – before for the provisions for PPI compensation and the other conduct issues were taken into account – was £1.91bn for the three-month period, down 3% on a year earlier.