Currently, the UK PPI crisis is now estimated to have a total of £12.96 billion in bank expenses for repaying all customers mis sold the insurance policy but financial analysts estimate that the amount can still increase next year. With over a 150% growth in the number of PPI claims from 2011 to 2012 and the Financial Ombudsman receiving 1,500 claims on a daily basis, analysts estimate the amount can reach up to £16 billion halfway next year.
All UK banks have set aside additional money for compensating all who are mis sold PPI. Lloyds still leads after setting aside £1 million more to add to their already-existing £5.3 billion PPI bill. Barclays, at £2 billion, is now at £2.7 billion after setting aside £700 million more for PPI. RBS reaches £1.7 after setting aside £400 million and HSBC is now at £1.3, setting aside an additional £220 million.
Claims management companies were criticised by banks for capitalizing on consumer claims and “clogging” the process with almost 1/5 of the claims appearing duplicated or fraudulent. However, CMCs like MisSoldPPIClaimsCo.co.uk, state that they thoroughly look through every claim they receive. They also mention that if the bank did what the Financial Services Authority asked them to do, there will be no PPI industry from CMCs.
Early this year, the FSA asked all UK banks who mis sold PPI to write to potentially mis sold customers. However, banks never fully performed the task, seeing the great number of bogus claims coming from many customers. Banks also blame the FSA for the increased number of PPI claims, increasing their bureaucratic costs.
The Financial Ombudsman Service proposed a no-claim payout for consumers because the service saw that banks were “dragging their feet” in resolving the situation. The no-claim payout compensates the mis sold consumer without having to make a claim as crediting and insurance companies will work directly with the regulator in identifying the cases.