Banks' PPI bill reaches £10 billion

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HSBC has earmarked a further £340 million to settle claims for mis-sold payment protection insurance (PPI), which with other expected provisions this week will bring the total amount set aside by Britain's big highstreet banks to close to £10 billion. This looks to be the biggest consumer financial scandal of all time - eclipsing pensions mis-selling and endowment mortgages.

But alas not all of this is going to the millions of people who have been mis-sold the controversial insurance. Claims management firms, which offer to help people get their money back but charge huge fees, have cashed in to the tune of £1 billion. Read on for some tips for making a claim, for free, yourself.
Last week Lloyds increased the amount set aside for PPI claims by £700m million to £4.3 billion, and RBS is also expected to set aside more money when it reports its results this Friday. The total for the five largest banks - HSBC, Lloyds, Barclays, RBS, and Santander - has reached £8.8 billion so far.

HSBC boss Stuart Gulliver apologised for "the mistakes of the past," saying: "We are profoundly sorry for our mistakes, and are committed to putting them right."

Lloyds was the biggest culprit, accounting for the lion's share of claims. Designed to cover debt repayments if someone fell ill or lost their job, PPI was sold alongside other products such as credit cards or personal loans and consumers were either not told the insurance was added or not given full information. Some weren't even eligible, for example self-employed people were not covered by PPI.

Which? chief executive Peter Vicary-Smith said: "These latest figures from the banks show that PPI is now on course to become the biggest consumer financial scandal of all time, exceeding pensions mis-selling and the endowment mortgage scandal.

"The banks must make it straightforward for people to reclaim PPI themselves, for free, so they don't resort to expensive and unnecessary Claims Management Companies (CMCs). We now need the government to raise its game too, and toughen up the regulation of unscrupulous CMCs who are exploiting consumers who just want to claim back what is rightfully theirs."

By the end of May, £4.8 billion had been paid out. There is still around £5 billion in mis-sold PPI to be claimed, says Which?. Its research found that a quarter of people didn't know that CMCs took a fee, while only half knew that using a CMC would be no more successful than making the complaint themselves.

How to make a claim

1. To figure out whether you have been mis-sold PPI, ask yourself these questions: Did you realise at the time you were buying this insurance? Were you told (falsely) that you had to buy it? Did it actually cover you?

2. If you think you have reason for complaint, write to the bank or other lender that sold you the policy. Some have set up hotline numbers for complaints. The Financial Ombudsman Service has a list of contact numbers and addresses.

3. DO NOT make a claim through a claims management firm. This won't increase your chances of a payout and you will have to pay a substantial fee to get your money back.

5. If your complaint is rejected, you get less back than you expected or nothing happens within eight weeks, you can complain to the Financial Ombudsman Service. You need to do this within six months. Phone their consumer helpline on 0300 123 9 123 or 0800 023 4567 or email You will need to fill in a form, available here. The FOS has come up with these hints on the best ways of making sure your complaint is taken seriously.

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