Over the past two years the payment protection insurance scandal has escalated greatly. Currently, the result of this is illustrated in the £9bn UK banks have had to pay in compensation to customers who have been mis-sold PPI. This has now become the most pricey financial scandal in British banking history.
The report entitled PPI Refunds and Compensation, from the Financial Services Authority, claims that banks paid £439m in January alone of this year. This brings the total to £8.9bn paid in compensation since Jan 2011.
And it is not only the amount of compensation that is on the rise, but also the number of banks and building societies that are paying has risen. 24 firms now make up for 96% of the PPI complaints, as opposed to the 16 firms making up 92% in the year before.
The Financial Ombudsman Service (FOS) recently claimed that in the second half of 2012, complaints from PPI claimants rose by 110%, reaching a total of 283,251. Up to 20,000 new jobs have been created in order to deal with the huge increase in PPI claims. Recently, the quarterly report of the UK employment situation has reported that the UK’s employment state is the best it has been since the recession started. Correcting the PPI scandal has created thousands of jobs, which will only improve the employment situation in this sector.
The Financial Ombudsman Service has been swamped recently as the number of Payment Protection insurance mis-selling cases keep steadily flowing in. From June to December 2012, the number of complaints more than doubled and more than 250,000 new complaints were registered against big banks.
PPI claims have shot up, as the graph shows. Lloyds have been the hardest hit by this scandal, the worst one in British banking history, with a whopping total of £6.7bn in compensation paid so far.
