The amount that Barclays have paid out for compensation to customers to whom they mis-sold payment protection insurance (PPI) has jumped by £700million following an announcement from the bank today, reaching the dizzying height of £2billion. It’s a truly astounding figure and just goes to show how wide spread the mis-selling of PPI truly was.
The bank was one of many that engaged in the deliberate mis-selling of PPI, in some cases bare-faced lying to customers in order to make them take out the insurance, or simply not telling them they were being charged for it. The staff who managed to sell the policies got bonuses, and those who bought them found that, in many cases, they were worth less than the paper they were written on.
PPI was supposed to allow consumers to add a bit extra to repayments on their loans or mortgages each month in order to cover them if their repayments fell behind because of illness, injury, or for some other reason. However, there were many restrictions on the policies that meant many people found they weren’t covered, despite being told they were and paying into the schemes for years.
The first lot of money was set aside in 2011, when Barclays had to organise a £1billion fund to pay back the people who were expected to come forward with mis-sold PPI claims. Earlier this year, it was upped by another £300million, and today an extra £700million was added after the Financial Ombudsman Service revealed that it had received more than double the complaints it was expecting so far this year.
Barclays were not the only bank that had to pay out, with Lloyds Banking Group reaching £4.3billion, HSBC hitting £1.7billion and RBS totalling £1.3billion worth of PPI compensation payments. However, this is all just what has been announced so far, and if today’s announcements are anything to go by, all of the banks could find that they’re going to have to set much, much more aside.