Over £13 billion has been paid out in compensation for mis-sold PPI since 2008. Despite this the Chief executive of the Financial Services Compensation Scheme, Mark Neale warns that these “[claims] will go on for a number of years”. The Financial Services Compensation Scheme often helps customers by getting back their money for them after businesses have become insolvent. Mark Neale has stated, “we will continue to see firms fail with PPI liabilities and it’s too early to say we’ve seen the peak”.
It is predicted that PPI claims will rise by 20% in 2014, which equates to higher than 16,000 claims. Mr Neale went on to say, “I can’t tell you for how long, nor can I tell you when the peak of claims will be, but typically, you have a fairly normal distribution curve over the years”.
PPI was originally provided to customers as a safety measure to help protect them, by covering their loan repayments if the customer became ill or became unemployed. However, many complaints have arisen from customers who believe they have been mis-sold PPI. As a result, a large amount of money has been paid out to compensate these customers. £20 billion has been earmarked by the Big Four banks, in order to compensate their customers. In May 2001, it was estimated that an average of £735 million a month was being paid out.
Although there does seem to be a decline in new claims currently, there is still approximately £500 million being paid out each month.
The majority of customers claimed through the Financial Ombudsman. Mr Neale said, “the Ombudsman service has seen a fall in new claims it’s receiving. Sooner or later that will happen to us, but it’s too soon to say [exactly when] that’s going to be”.
According to the head of the UK’s financial compensation authority, the financial sector in Britain will continue to see claims for PPI from customers who have been mis-sold to, and it is clear that the situation has not peaked and that there are many more claims to arrive and therefore more payouts to be made.