£1bn shortfall: Leading Banks Underpaid Payment Protection Insurance Compensation
Posted on: June 5th, 2014 | Author: crystaladmin
Payment Protection Insurance – The Bank’s £1bn Shortfall
BBC news have revealed that some banks including Lloyds, Barclays, MBNA and Capital One may have underpaid Payment Protection Insurance compensation to consumers which could amount to a £1bn shortfall.
The shortfall relates to credit card charges and fees not being included in the original compensation calculation. In many cases the banks had refunded the premiums on the customers mis-sold PPI plus interest but failed to refund additional charges as a direct result of the Payment Protection Insurance premiums.
All banks concerned declined in commenting on the way their compensation is calculated but stated that they pay redress that puts the customer back into the position they would have been in if they had not paid PPI.
It adds insult to injury to be mis-sold PPI and then not get paid the full compensation you are due
Which? executive director Richard Lloyd
However the Financial Ombudsman revealed that they have found cases where the fees and charges have not been included in the compensation calculation.
Principle Ombudsman, Caroline Wayman commented “ There is no doubt fees and charges triggered by mis-sold Payment Protection Insurance premiums have to be refunded to customers.”
“If a fee is the result of the mis-sold PPI, it should be given back, and if it’s not included, that would be a mistake.”
The £1bn shortfall has been calculated by banking expert Cliff D’Arcy, a banker with 12 years’ experience of working in the PPI industry.
“I’m confident that the figure will be somewhere in the region of £1bn of extra compensation,, it’s because banks were charging very high penalty fees, very high rates of interest on borrowing and some of these claims go back decades. So it just compounds and multiplies to a very big number.”
Richard Lloyd, executive director of the consumer group Which? said banks should ensure that customers were getting every penny they were entitled to.
“It adds insult to injury to be mis-sold PPI and then not get paid the full compensation you are due,” he said. “If there is new evidence of systematic mistakes by the banks then the FCA should investigate and take tough action against any bank found breaching the rules.”
It’s difficult to know just how many people have been effected but the Financial Ombudsman encourages anyone who suspects their fees and charges were left out of their compensation calculation to go back and ask if these were included in their redress!
If you’d like to speak to one of friendly and professional adviser regarding mis-sold PPI or any other financial mis-sell including mis-sold PPI, simply call 01270 44 66 44 or submit an online form and one of our advisers will contact you.