It has been estimated that mis-sold PPI repayments could reach a collective 11 billion by the end of the year. Early estimates predict that numbers of claimants could rise this year with the cost to banks being huge. The Telegraph reports that just a 100 increase in the average pay out amount would cost banks 70 million. PPI has become something of a buzz term in the past couple of years, but there are still many people that are unsure as to what it actually is. As more people understand how the Insurance policy works, and how it affects them we could see a surge in repayments.
What is PPI?
PPI is sold by banks to people taking out loans. Its purpose is to protect those people from incurring penalties should they not be able to pay back their loans. PPI applies to people who are unexpectedly unable to work (perhaps due to ill health) and are therefore not earning money and cannot afford the loan repayments. There are many, many cases where people have been sold PPI unnecessarily or even without their knowledge. Those that have been sold these insurance schemes are now eligible to reclaim the money they have lost.
Banks have been budgeting this year for more claims, as many leading firms are putting away billions for the expected costs. Reuters says:
According to figures from Britain's financial regulator, 50 million PPI policies were sold and only around 15 percent of people who had the policies have claimed for compensation.
The bank Barclays are still receiving more than 1,500 complaints every day about mis-sold PPI alone. There are suggestions that the peak has been reached and claims are now dropping, as numbers were much higher a year to 6 months ago. If the 15 percent estimate of claimants is accurate though, we could yet see complaint rates rise again.
Boosting the Economy
The often hefty repayments have helped to boost the economy too, according to the Office of National Statistics. With the 10 billion that has been handed back a rise in car sales has occurred, beginning in 2011. This has been linked with PPI repayments as the time at which the repayments occurred corresponds with the boost in car sales. This shows just how much money people have been missing as a result of bank errors.
Stopping the Scheme
Nationwide have ceased selling PPI altogether as it concedes its staff have been mis-advising customers. Insurance Daily claims that PPI is not a major source of revenue for Nationwide. Perhaps if that was the case, they may be reluctant to stop the scheme. With such widespread misselling of the insurance package, it's likely that you yourself will require some legal assistance in claiming back your money. Get in touch with us if you think we can help.