To give a bit of background, PPI was designed to protect against people defaulting on their loans – so if you fell ill or lost your job, the insurance would keep up your payments. Nice idea in principle – but it turned out most of the people it was sold to wouldn’t have qualified to claim on their policies in the first place, while others thought buying the insurance was a condition of taking out their loan.
The figures are, rather mysteriously, supplied by ‘16 unnamed firms’ which make up the majority of PPI cases, and show that the average payout for a successful claimant is just over £2,000 (although others have won larger amounts).
But consumer groups claim that banks have been too slow about paying out compensation. ‘There is too much putting off responses, too many delays for many, many, many people trying to get their money back for something they should never have been sold in the first place,’ complained Richard Lloyd from Which?. The good news (for consumers, at least) is that the amounts being paid out are increasing: while the total was £268m in October, it rose to £379m in November and £441m in December.
Presumably, banks are keen to speed things along, too, so they can draw a line under the whole fiasco and move on. Unfortunately for them, the FSA reckons that there have been even more complaints over the past couple of months – apparently, the total bill could rise to £8bn.
The worry now is the number of claims firms trying to gee up people’s interest in PPI with the promise of free money. Even consumer groups have warned against using them, pointing out the chances of success would be the same whether or not people use a claims firm. Although with all those TV ads showing confident-looking people in suits waving tempting-looking piles of cash, we’d imagine this is a scandal that will linger on for a while.