The UK companies that have mis-sold payment protection insurance have paid out an estimated GBP 215 million during the first half of the year according to the FSA.
In May and June alone, GBP 102 million was paid out after U.K. banks dropped a legal fight to delay or change the terms of PPI repayments, which are being made after the industry conceded that customers for years had frequently bought insurance they didn’t understand or that wasn’t suitable for their needs.
“The treatment of PPI complainants has left an indelible stain on the financial industry’s record,” Margaret Cole, interim managing director of the FSA’s conduct business unit, said. “By releasing these figures we’re providing a useful measure of firms’ progress that can be tracked on an ongoing basis.”
The FSA said that 16 companies, representing 92% of PPI complaints received in the first half, had paid out GBP 215 million in redress. The remaining 8% of complaints are applicable to around 400 other companies.
“We remain committed to ensuring that where consumers were mis-sold PPI they will receive the appropriate redress from firms, and we are monitoring firms’ progress to ensure this is done properly,” Cole said. “Where we find that this not to be the case, we are not afraid to take tough action.”
The sale of PPI policies to cover customers payments on mortgages and credit cards and personal loans was a booming, multi billion-pound business for the U.K. banking industry in the 2000s but tapered off in the past few years as regulatory authorities started to crack down on how some of the policies were marketed. The FSA implemented new rules last year that were contested by banks until their step-down over the issue in May.
As a result, U.K. banks Barclays PLC (BCS), HSBC Holdings PLC (HBC), Lloyds Banking Group PLC (LYG) and Royal Bank of Scotland PLC (RBS) took more than GBP5 billion of provisions in their first half results to cover PPI compensation.
London, August 30, 2011, (Dow Jones)
