Under recent proposals from the regulator, the Financial Conduct Authority (FCA), the financial services industry can look forward to a time bar on payment protection insurance (PPI) claims from 2018. In the meantime though, the UK’s largest banking group, Lloyds Banking Group, has been forced to once again increase the amount it has set aside for PPI compensation.
The Lloyds group, which includes Bank of Scotland and Halifax, has now set aside an additional £500 million to take its total to £13.9 billion. An additional £100 million has been reserved for mis-selling claims in other areas. Unless its PPI complaint volumes decrease significantly over the next 15 months, then further sums are likely to be set aside by the group.
Its statutory pre-tax profits for the three months to September 2015 were £958 million, up from £751 million in the equivalent period in 2014.
The Government’s stake in Lloyds Banking Group has now reduced to 11%.
Barclays’ PPI provision currently stands at £6 billion, Royal Bank of Scotland’s at £3.8 billion, HSBC’s at £2.6 billion and Santander’s at £836 million.
For now, PPI complaints can continue to be made, regardless of when the policy was sold, on the usual mis-selling grounds. These include:
• PPI policies not covering the full loan term
• Firms failing to take into account existing insurance and sickness benefits when assessing suitability of the cover
• Firms not notifying customers of key policy exclusions, such as pre-existing medical conditions
• Customers being told PPI was compulsory, or that it would improve their chances of being accepted for the loan
• Customers being sold PPI without their knowledge or consent
• PPI being sold to self-employed customers who were ineligible to claim under the unemployment section of the policy
Complaints might also be made about the amounts of compensation offered where firms have upheld PPI claims.
Subject to consultation, the FCA has also paved the way for complaints to be tabled on the grounds that the undisclosed commission payment on the contract created an unfair relationship. Firms would be expected to pay redress based on the amount by which the commission exceeded 50% of the premium. There would be no requirement for firms to re-assess previously rejected PPI complaints against the new criteria.
This new move follows a landmark Supreme Court judgement in the case of Plevin v Paragon Personal Finance.
So the PPI saga may end in 2018, but there could be many more developments to come before then.
The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.