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EnergyPPI row payouts hit £1.9bn in 2011
Filed under: Debt
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Nearly £2 billion of compensation payments were made last year to settle claims from the mis-selling of payment protection insurance (PPI).The figure of £1.9 billion revealed by the Financial Services Authority included £441 million in December - the largest monthly sum so far.
Debt Advice
However, consumer group Which? urged banks to do more to step up the pace of redress and help consumers avoid the use of claims management companies.
Which? executive director Richard Lloyd said last year's compensation of £1.9 billion was still only a quarter of what lenders expected to refund.
He added: "Too many people are still finding the claims process too lengthy, the banks must streamline the process to make it easier for people to claim. Otherwise this leaves an open goal for claims management companies that charge people a hefty fee for putting in a claim which is easily done yourself for free."
Which? said anyone who thinks they may have been mis-sold PPI should contact their lender directly or visit its website at which.co.uk.
The banks have set aside an estimated £7.6 billion to compensate consumers who were mis-sold PPI but based on an average fee of 30% the compensation could be worth more than £2 billion to claims firms.
Barclays, which has set aside £1 billion to cover mis-selling claims, has issued figures showing PPI fuelled a 67% jump in the number of complaints in its general insurance and protection business to 122,922 in the second half of 2011.
It has not disclosed how much it has repaid customers so far but said excluding the PPI figure its volume of complaints was down 29% in the half-year compared with 2010.
Consumers took out PPI to help repay their loans if they fell ill for a long period or became unemployed, but a widespread mis-selling scandal emerged.
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Which? executive director Richard Lloyd said last year's compensation of £1.9 billion was still only a quarter of what lenders expected to refund.
Debt Advice
He added: "Too many people are still finding the claims process too lengthy, the banks must streamline the process to make it easier for people to claim. Otherwise this leaves an open goal for claims management companies that charge people a hefty fee for putting in a claim which is easily done yourself for free."
Five biggest taxpayer stings
- 1. HMRC vs Vodafone<p> Most recently HM Revenue & Customs let Vodafone off the hook - for quite a sum. Vodafone paid out just £1.25 billion despite an original tax bill being closer to £8 billion (HMRC has always refused to reveal how much it thought the Vodafone final bill was). The episode was made even more shaming and painful because Vodafone was given several years to come good with the cash owed - even though it was sitting on a substantial cash pile at the time.</p>
- 2. HMRC vs Goldman Sachs<p> The Exchequer is estimated to have lost around £10 million to Goldman Sachs recently through an 'error' made by HMRC. The episode relates to an employee benefit trust run by Goldman allowing employees to take non-repayable loans that had no National Insurance contributions tied to them. HMRC <em>did</em> claw back the full amount from more than 20 businesses - but not Goldman. HMRC remains cagey about the details of the deal. Little HMRC accountability or transparency.</p>
- 3. Taxpayer vs Carlyle Group - QinetiQ<p> Huge problems with QinetiQ, the former Defence Evaluation and Research Agency, or DERA. A lack of clarity on contractual arrangements at the outset didn't help, allowing private equity company Carlyle to hammer the price down (why would you start negotiations when you didn't know the company's true value?). The Ministry of Defence behaved, it was said, like "an innocent at a table of card-sharps". Estimated cost to the taxpayer - £90 million. Huge sums were later made by QinetiQ management when the company listed.</p>
- 4. Taxpayer vs NHS Management<p> The TaxPayers' Alliances estimates £2.7bn worth of taxpayer cash was wasted with a super-expensive 'National Programme for IT in the NHS'. The Department of Health, in the end, had very little to show for it as a consequence. Another example of poor management and a seemingly ingrained inability to provide taxpayers' with value for money.</p> <p> <br /> "BT is paid £9 million to implement systems at each NHS site, even though the same systems have been purchased for under £2 million by NHS organisations outside the Programme", the Commons Public Accounts Committee noted.</p>
- 5. Taxpayer vs public sector productivity<p> Contentious. The Office for National Statistics estimated this has declined 3.4% since 1997, "with inputs increasing by 38%." The Centre for Economics and Business Research estimate that this inefficiency costs the taxpayer £58.4 billion a year.</p> <p> Given the above record, are there any deals that the taxpayer has actually won out on? Not many, but the one successful project was the roll out of new Jobcentre Plus offices. It came in £314 million under budget, claims the Taxpayers' Alliance. A small cheer.</p>
Which? said anyone who thinks they may have been mis-sold PPI should contact their lender directly or visit its website at which.co.uk.
The banks have set aside an estimated £7.6 billion to compensate consumers who were mis-sold PPI but based on an average fee of 30% the compensation could be worth more than £2 billion to claims firms.
Barclays, which has set aside £1 billion to cover mis-selling claims, has issued figures showing PPI fuelled a 67% jump in the number of complaints in its general insurance and protection business to 122,922 in the second half of 2011.
It has not disclosed how much it has repaid customers so far but said excluding the PPI figure its volume of complaints was down 29% in the half-year compared with 2010.
Consumers took out PPI to help repay their loans if they fell ill for a long period or became unemployed, but a widespread mis-selling scandal emerged.
More stories
The FSAs ten biggest fines
Santander fined over limited cover
FSA closes 'sale and rent back' market
