PPI News

Monthly PPI Refund Payments Continue to Outstrip 2014

September 14, 2015

The amount of monthly PPI refund payments paid to customers continues to stay ahead of 2014 levels according to the latest data released by the FCA.

Each month, the Financial Conduct Authority (FCA) releases data relating to the value of PPI refund payments paid to bank and credit card customer who were mis-sold payment protection insurance. The city watchdog has just published its data for July 2015 which although showing a slight decrease on July 2014, keeps the total value of PPI refund payments in 2015 ahead of the comparative period in 2014.

In July 2015, £327.9 million was paid out by banks and credit card companies to customers who were mis-sold payment protection insurance, bringing the total value of PPI refund payments for the year to date to £2.719 billion. By comparison, the total for 2014 up until the end of July was £2.659 billion. However, little of the increase can be attributed to banks and credit cards adopting fairer banking practices.

Last month the Financial Ombudsman Service published its complaints data for the first quarter of 2015/16 (April 2015 – June 2015) and the first half of the calendar year (January 2015 – June 2015). Both revealed quite disturbing figures about the level of banking practices being adopted by banks and credits card companies, with overall uphold rates for PPI complaints running at 74% and 76% respectively.

The worst offender among the major financial institutions was again the Lloyds Banking Group. More than 40,000 new PPI-related complaints were accepted by the Ombudsman from customers of the Lloyds Banking Group (which includes Lloyds PLC, Bank of Scotland, Halifax, and the Cheltenham & Gloucester Building Society), with 93% of PPI-related complaints against Lloyds Bank PLC upheld in the customer´s favour.

The Lloyds Banking Group recently increased its provision to pay PPI refund payments by £1.4 billion, and the group´s CEO – Antonio Horta-Osorio – warned that another £1 billion could be added to the provision during 2015, with another £2 billion allocated in 2016. Mr Horta-Osorio is possibly considering a soon-to-be-delivered statement from the FCA regarding the implications of the recent Plevin –v- Paragon Personal Finance court case, in which the claimant was successful in claiming that PPI was mis-sold to her because the value of the sale commission was not made clear.

If the FCA confirms all customers are entitled to PPI refund payments for the sales person´s lack of transparency, the value of monthly PPI refund payments could outstrip the record levels seen in 2012.

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Uphold Rate for PPI Complaints to Ombudsman Rises to 76%

August 24, 2015

The half-yearly complaints data report from the Financial Ombudsman Service has revealed that the uphold rate for PPI complaints has risen to 76%.

The Financial Ombudsman Service is an independent arbitrator when disputes arise between financial institutions and their customers. Every six months, the Ombudsman publishes a table which reveals how many complaints it has received about payment protection insurance and other financial products.

As has been widely forecast, the number of new complaints about PPI has declined considerably. However, against most predictions, the uphold rate for PPI complaints – the percentage at which complaints are found in the customer´s favour – has increased substantially from an average of 60% in 2014 to 76% in the first half of 2015.

The significance of the rise is that financial institutions have for a long time been accusing claims management companies of submitting speculative claims for PPI compensation. It was expected – according to the credit providers´ allegations – that the uphold rate for PPI claims would fall closer to 50%. However, quite the opposite has occurred.

One of the reasons for such a substantial rise in the uphold rate for PPI complaints appears to be that many customers of Clydesdale Bank have not waited for the company to complete its review of PPI claims – ordered by the Financial Conduct Authority last April – before contacting the Ombudsman with a complaint. The uphold rate for Clydesdale Bank PPI claims was 85%.

However, the high uphold rate for PPI complaints against the Clydesdale Banks was yet again dwarfed by units of the Lloyds Banking Group. The Ombudsman found in the customer´s favour in 93% of PPI complaints against Lloyds Bank PLC, in 86% of PPI complaints against Black Horse Limited and in 66% of PPI complaints against the Bank of Scotland – who, for the first time ever, became the leading source of new PPI complaints with 15,002 new cases accepted by the Ombudsman compared to 13,319 new PPI cases against Lloyds Bank PLC and 12,111 new PPI cases against Barclays Bank.

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Fund to Pay Lloyds PPI Refunds Increases by Another £1.4 Billion

August 4, 2015

The fund to pay Lloyds PPI refunds increased by £1.4 billion in the last quarter, and it could increase even more according to the bank´s CEO Antonio Horta-Osorio.

The Lloyds Banking Group has now put aside £13.4 billion pounds to pay customers of Lloyds PPI refunds – more than half the total provision of the entire UK banking industry – and Antonio Horta-Osorio has admitted that the mis-selling scandal could cost the banking group another £1 billion pounds this year and £2 billion more in 2016.

Commenting that he was “disappointed” with the rate at which claims for Lloyds PPI refunds were declining, Mr Horta-Osorio acknowledged that the situation could get worse before it gets better. More than 1.2 million claim for Lloyds PPI refunds are being re-assessed following the FCA´s £117 million fine for the failure to investigate PPI claims against Lloyds.

The implications of the recent Plevin –v- Paragon Personal Finance court case – in which the claimant won the right to claim PPI compensation because she was not fully informed of how much commission was being paid to brokers – could result in the banking group receiving millions more claims for Lloyds PPI refunds. The specialist securities firm Cenkos has estimated that the cost of Lloyds PPI refunds for this reason alone could be as high as £10 billion.

The reason that the PPI scandal has hit the Lloyds Banking Group harder than most other financial institutions in the UK was that it sold more than 16 million PPI policies since 2000. It has now settled claims on 45 percent of these policies – such was the scale of mis-selling by the banking group – and the current increase in the fund to pay Lloyds PPI refunds assumes that there will be a significant decrease in claims volumes.

In addition to the increase in the fund to pay Lloyds PPI refunds, the banking group´s first half report revealed for the first time the cost of refunding customers for the mis-selling of packaged bank accounts. The Lloyds Banking Group set aside £175 million to account for the volume of Packaged Bank Account Claims for compensation that have been received – significantly less than its High Street rivals the Royal Bank of Scotland (£300 million) and Barclays (£200 million).

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£117 Million Fine for Failure to Investigate PPI Claims against Lloyds

June 5, 2015

The failure to investigate PPI claims against Lloyds fairly has landed the Lloyds Banking Group with a record fine from the Financial Conduct Authority.

The Financial Conduct Authority (FCA) has issued a record fine of £117,430,600 against the Lloyds Banking Group following an investigation into the way the group handled complaints from customers who had been mis-sold payment protection insurance.

The investigation covered the failure to investigate PPI claims against Lloyds from 5th March 2012 to 28th May 2013, during which time the “complaint uphold rate” – the percentage of PPI claims that were settled in customers´ favour – fell from 82% to 26%.

The decline in upheld complaints was attributed to guidelines being issued to more than seven thousand claims handlers that Lloyds PPI sales processes were compliant unless proved otherwise. This “overriding principle” resulted approximately 850,000 claims for PPI being rejected without the required impartial investigations being conducted.

The main reason for failure to investigate PPI claims against Lloyds was that claims handlers were told to make only “reasonable attempts” to contact customers when further information was required to conduct impartial investigations. When claims handlers were unable to contact customers – and there was insufficient evidence to support a claim for being mis-sold PPI – it was considered that the customer had failed to meet their “burden of proof” and the claim for PPI compensation was rejected.

However, the Lloyds Banking Group failed to inform claims handlers of known failings in the sale of PPI that compromised their judgement. These failings included the automatic inclusion of PPI in quotes for loans, the failure of sales advisors to assess a customer´s suitability for PPI, and the faking of PPI agreements in order to meet sales targets. It was not until October 2012 that claims handlers were told that customers who applied online for a credit facility were automatically opted in to PPI.

The actions of the Lloyds Banking Group resulted in the failure to investigate PPI claims against Lloyds fairly. Some customers whose PPI claims were rejected were told that their complaint had been “fully investigated” with “appropriate weight and balanced consideration to all available evidence”, when this was not the case. Other customers, who received an offer of settlement, were offered “ex gratia” payments, rather than receiving a full refund of the PPI compensation they were entitled to.

Speaking about the £117 million fine for the failure to investigate PPI claims against Lloyds fairly, Georgina Philippou – the FCA´s Acting Director of Enforcement and Market Oversight – said: “The size of the fine today reflects the fact that so many complaints were mishandled by Lloyds.  Customers who had already been treated unfairly once by being mis-sold PPI were treated unfairly a second time and denied the redress they were owed. Lloyds’ conduct was unacceptable.”

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Rise in PPI Compensation Payments Goes Against S&P Prediction

May 15, 2015

The latest data released by the Financial Conduct Authority shows that PPI compensation payments have increased year-on-year for the third month in a row.

On the Financial Conduct Authority´s website, the city watchdog maintains a table recording the PPI compensation payments made each month by banks and other credit providers. The table has just been updated to include the PPI compensation payments for February 2015 – the third month in a row that PPI compensation payments have increased compared to twelve months ago.

The figure for February 2015 – £361 million – is a 9.5% increase on the £329.5 million that was paid in PPI compensation payments in February 2014. The percentage increase is similar to the rise in PPI compensation payments identified in January 2015 (£424.5 million from £389.2 million) and follows the 26% year-on-year increase in PPI compensation payments seen in December 2014.

The rise in PPI compensation payments does not necessarily indicate that more PPI claims are being submitted by ripped-off customers, just that more are being settled. It is possibly the case that banks and other credit providers are treating their customers´ claims more fairly than before – when many customers had to appeal to the Financial Ombudsman Service to recover what they were due.

Until the Financial Ombudsman Service produces its H1 report at the end of June, the reason for the rise in PPI compensation payments can only be a matter of speculation. However, the upward trend in PPI compensation payments appears to go against a prediction by the ratings agency Standard & Poor that “the worst period for PPI provisions has now passed”.

The rating agency´s prediction came in a report forecasting how much the four leading banking groups may still be liable for to pay for past “mistakes”. Since 2010, Lloyds, Barclays, HSBC and the RBS Group have paid out more than £42 billion in fines, charges and redress – not just for the mis-selling of PPI, but also for the mis-selling of interest rate products, LIBOR rigging, and the manipulation of foreign exchange markets.

Standard & Poor forecast that the four banking groups would allocate a further £19 billion before the end of 2016 to pay for their previous wrong-doings – a forecast that was followed by the announcements that Barclays was setting aside £800 million to pay fines for foreign exchange manipulation and £150 million for PPI compensation payments, and that the RBS Group and the HSBC Group were both setting aside a further £100 million towards their PPI obligations.

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FCA Identifies Fall in PPI Insurance Complaints

April 1, 2015

The Financial Conduct Authority has identified a 14% fall in PPI insurance complaints during the second half of 2014 according to the latest available data.

Firms that receive more than 500 complaints within a six month period are required by the Financial Conduct Authority (FCA) to publish statistics on their website relating to the number and nature of the complaints. The FCA then collates these statistics to monitor how many complaints are being received by financial institutions and to what financial product(s) they relate.

Since 2011/2, the complaints data collated by the FCA has been dominated by PPI insurance complaints. However, in the latest available data relating to the second half of 2014, PPI insurance complaints have seen a significant decline of 14% – the first time since late 2011 that PPI insurance complaints have accounted for less than 50% of the total number of complaints

Nonetheless, more than one million PPI insurance complaints were received by the leading banking groups in total – with units of the Lloyds Banking Group again taking first and second place on the list of the most complained about banks (figures relate to all complaints about insurance products):

  1. Lloyds Bank– 183,652
  2. Bank of Scotland– 179,250
  3. Barclays Bank – 157,822
  4. MBNA– 95,217
  5. HSBC – 76,968

Speaking about the fall in the number of PPI insurance complaints, Christopher Woolard – the FCA’s Director of Strategy and Competition – said: “Today’s statistics offer a mixed picture. When you take PPI out of the equation, complaints are still on the up.  So, while the overall decreases we have seen should be welcomed there is still more for financial services firms to do. The FCA’s challenge to those firms is to put the necessary measures in place to ensure we see a consistent fall across all sectors.”

Elsewhere within the FCA´s data, the total amount paid by monitored banking groups in redress for missold PPI policies and other insurance products increased slightly from £2.34 billion in the first half of the year to £2.44 billion between July and December.

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Ombudsman Receiving More Complex PPI Complaints

February 26, 2015

The Financial Services Ombudsman has reported that it is receiving a higher number of complex PPI complaints and appeals against banks´ decisions.

The announcement of the increasing number of complex PPI complaints was released in the Ombudsman´s second half report for 2014. The independent arbitrator of financial disputes revealed in the report that the total number of PPI-related complaints and appeals fell from 133,000 in the first six months of the year to just under 105,000 between July and December.

PPI ClaimsHowever, PPI-related complaints and appeals still account for nearly two-thirds of the Ombudsman´s workload and there has been a changing trend in the nature of issues customers are asking the service to resolve, which – according to Chief Ombudsman Caroline Wayman – “are becoming increasingly hard-fought and more complex”.

Despite the increase in complex PPI complaints, the Ombudsman is achieving significant results in investigating claims and appeals on behalf of customers. 82% of PPI complaints made against certain units of the Lloyds Banking Group were upheld in the second half of 2014, and 68% of the PPI complaints made against Barclays Bank PLC.

Other credit providers against which the Financial Services Ombudsman achieved significant uphold percentages included the HFC Bank (part of the HSBC Group – 83%), Citibank (74%) and Capital One Credit (60%).

Unsurprisingly, the Lloyds Banking Group and Barclays Bank PLC were identified in the Ombudsman´s half-yearly report as Britain´s most complained about financial institution. According to data available on the Financial Services Ombudsman´s website, more than 36,000 of the PPI complaints received between the second half of the year (from a total of 105,000) were made against the Lloyds Banking Group, while 15,877 complaints were made about the service provided by Barclays Bank PLC.

Other financial institutions that were recorded as failing to satisfy their customers´ expectations of service included the HSBC Group (9,740 complaints), the RBS Group (6,914 complaints), Capital One (6,289 complaints) and the Santander Group (3,917 complaints).

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Fund to Pay Lloyds PPI Refund Claims Increases Once Again

October 28, 2014

The fund to pay Lloyds PPI refund claims has been increased once again – on this occasion by an addition provision of £900 million

The extra £900 million added to the banking group´s fund to pay Lloyds refund claims takes the total value of the fund to more than £11 billion – and further provisions are anticipated in the future following the disclosure by the Financial Conduct Authority (FCA) that the banking group had been unjustifiably dismissing Lloyds PPI refund claims.

The Lloyds Banking Group has also been exposed for using a loophole known as “comparative redress” to underpay Lloyds PPI refund claims made by customers who were missold single premium PPI policies before the practise was stopped in 2009; and for neglecting to include credit account charges triggered by PPI premiums when the premiums took customers over their borrowing limits.

A spokesman for the Lloyds Banking Group said that the provision of extra funds to pay Lloyds PPI refund claims was a response to an unexpectedly high volume of claims being received by the banking group. The spokesman said that the number of Lloyds PPI refund claims had increased by 3% in the first half of 2014 to 264,115 compared with the second half of last year.

The Lloyds Banking Group has also revealed that – within the next three years – it is to shut two hundred branches of Lloyds TSB, the Halifax Bank and the Bank of Scotland throughout the UK. This is despite a commitment to the government that the same levels of service would be maintained as when the banking group was bailed out by the taxpayer in 2008. The closure of the two hundred branches will result in the loss of 9,000 jobs.

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Ombudsman Overturning Up To Three-Quarters of Disputed PPI Decisions

September 2, 2014

According to a report from the Financial Ombudsman Service, up to three-quarters of disputed PPI decisions are being overturned in favour of the consumer.

The latest report from the Financial Ombudsman Service reveals that disputed PPI decisions – most often complaints to the Ombudsman about the unfair rejection of PPI claims – are running at “significant levels” despite an overall fall in the number of cases accepted for investigation during the first six months of 2014.

Compared to the second half of 2013, when the Ombudsman received 193,054 complaints about disputed PPI decisions, 133,819 complaints were accepted for investigation – with the Lloyds Banking Group once again being the most complained about financial institution in the UK.

In the first six months of the year 26,209 PPI-related complaints were received about Lloyds Bank PLC (formerly Lloyds TSB), 24,134 PPI-related complaints about the Bank of Scotland and more than 2,500 PPI-related complaints about other entitles within the Lloyds Banking Group.

This represented almost 40% of the disputed PPI decisions received within the six month period, and it was significant to note that 73% of disputes between customers and Lloyds Bank Plc were found in favour of the consumer – higher than the overall average of 64% of complaints being resolved in favour of the consumer.

Chief Ombudsman, Caroline Wayman, said: “Responsibility for sorting out the mass mis-sale of PPI is still the major part of the Ombudsman’s workload. But during the first half of 2014 there’s been a marked change in the type of complaints consumers are asking us to resolve – as underlying attitudes become more entrenched and the issues involved get more complex”.

She continued: “We’re seeing more and more people turn to us in frustration where they feel their bank or insurer simply doesn’t understand or really care. And we’re hearing growing dissatisfaction from people about being processed industrially as a number rather than being listened to as an individual customer”.

Ms Wayman added that the volume of disputed PPI decisions could be reduced if credit providers communicated their decisions to their customers with more clarity. She said that by giving their customers more thoughtful and considerate responses, banks could sort out many of the problems at an earlier stage and prevent disputed PPI decisions being escalated to the Ombudsman.

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Lloyds PPI Compensation Fund Increased to £10.4 Billion

July 31, 2014

The Lloyds Banking Group increased the fund to pay Lloyds PPI compensation to £10.4 billion with the addition of an extra £600 million.

According to the Financial Conduct Authority´s second quarter PPI report; five major banking groups have recently increased – or are about to increase – their PPI provisions, with the Barclays PPI compensation fund growing by the largest amount and the Lloyds PPI compensation fund notable for breaching the £10 billion barrier.

The Financial Conduct Authority´s report also reveals that, since the Authority first started recording the value of PPI compensation payments in 2011, more than £15.5 billion has been paid to customers who were missold PPI. The report predicts that the current level of PPI compensation payments (c. £400 million per month) will continue for some time, and speculates that the PPI provisions of the leading banks and credit providers will soon total in excess of £20 billion.

A £20 billion PPI compensation fund does not seem so far-fetched when considering the volume of PPI complaints still under investigation at the Financial Services Ombudsman and that a significant number of missold customers are yet to claim PPI compensation.

In respect of the Lloyds PPI compensation fund breaching the £10 billion barrier, a spokesperson for the Lloyds Banking Group said that the additional provision of £600 million was in response to a slower than expected decline in the number of PPI claims being received – a statement confirmed by the Financial Conduct Authority´s report, which stated that claims for PPI refunds made against the Lloyds Banking Group are running at 70% of peak 2013 levels.

The provisions set aside to pay PPI compensation listed in the Financial Conduct Authority´s report were:

· Lloyds Banking Group – an additional £600 million bringing the Lloyds PPI compensation fund up to £10.4 billion

· Barclays – a further provision of £900 million brings the Barclays PPI compensation fund up to £4.85 billion.

· RBS/NatWest – added £150 million to the existing RBS PPI compensation fund, which now stands at £3.25 billion.

· HSBC – added a further £50 million to the HSBC PPI compensation fund which remains slightly above the £2 billion mark.

· Santander – anticipated to add £65 million to the existing Santander PPI compensation fund of £761 million.

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