BBC researchers have found that the incorrect calculation of PPI compensation is a common practice among banks and credit providers.
The researchers for the BBC radio program “You and Yours” found that banks and credit providers are frequently neglecting to include overdraft charges that were triggered by a PPI premium taking customers beyond their borrowing limits. The researchers allege that the incorrect calculation of PPI compensation is deliberate and is saving banks millions of pounds at their customer´s expense.
The researchers supported their allegations with evidence of miscalculated PPI refunds paid to customers of Lloyds, Barclays, MBNA and Capital One. All four of the credit providers investigated were guilty of the incorrect calculation of PPI compensation. The radio program also included an example of a miscalculation in which an MBNA customer had received a PPI refund of £5,800, but when his charges and compound interest were also included, should have received a refund in excess of £13,000.
Several other examples were included in the broadcast where an incorrect calculation of PPI compensation had been the basis of a PPI refund. Leading financial claims expert, Cliff D´Arcy, estimated that the total amount saved by banks and other credit providers approached £1 billion. He said that his high estimate was justified on the grounds that the fees charged for exceeding a borrowing limit are excessive, and that the practice of miscalculating PPI compensation appears to be so widespread.
Caroline Wayman – the Principle Financial Services Ombudsman – commented on the findings of the BBC´s researchers and said that, under the rules for calculating PPI compensation, “If a fee is the result of the mis-sold PPI, it should be given back, and if it’s not included in the amount [of the compensation], that would be a mistake.” She added “Any widespread failure to carry out proper calculations would most definitely be disappointing”.
The credit providers accused of the incorrect calculation of PPI compensation declined to be represented on the BBC´s broadcast; however the Lloyds Banking Group submitted a statement which was read out on the program. It said “When a customer lets us know that they may have incurred other costs because of their PPI policy, we will investigate and make an appropriate refund.”Read More