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Banks hit with £1 billion PPI bill

Banks hit with £1 billion PPI bill

Category: Insurance

Updated: 21/12/2011
First Published: 21/12/2011

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Banks have been hit with a £1 billion bill for payment protection insurance (PPI) compensation in 2011 so far.

Figures from the Financial Services Authority (FSA) show that customers were paid back the sum in the first ten months of the year.

October saw the largest total repaid by the banks, with £269 million given back to PPI customers.

The figures are based on 16 unnamed firms which were responsible for more than 92% of PPI complaints in the first half of 2011.

Earlier this year, banks were told they must pay back consumers who were mis-sold the cover, which was commonly sold with products such as unsecured loans or credit cards.

The judgment led to the banks being deluged with claims from customers who had taken out PPI cover.

In their summer results, a number of the banks said they had put money aside to pay back PPI customers.

Lloyds said it had earmarked £3.2 billion, while Barclays decided to repay customers all their premiums plus interest of 8%.

Last month providers were warned that regulators will be keeping a close eye on future payment protection products that are launched.

PPI can fall within either the FSA or the Office of Fair Trading's remit and the two bodies are currently consulting on proposed guidance to firms about future protection products, in an effort to prevent the problems associated with PPI.

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