Friday, 2 November 2012

Astonishing PPI figures

Many are saying that the mis-selling of Payment Protection Insurance or PPI has turned into the biggest financial scandal in UK history.

The figures are staggering: £12.7bn is already set aside by banks and other firms to compensate their customers, but there are predictions that this will rise to £15bn or even higher.

So what is actually happening out there?

By a rough calculation, banks are sending out 10,000 payments or cheques a day, with typical payments averaging around £2,750.

That means nearly £30m is being shelled out daily to the growing ranks of customers who lost out and have made a claim.

At that rate it would still take a further 9 months to distribute all the compensation money which has been set aside.

If the claims keep coming in and banks have to provide more money, which seems highly likely, it will take more than a year.

The number of customers who have been paid compensation has probably already risen above 2.5 million.

Who knows what impact this will have?

It's welcome news for anyone who gets a payout. Some will save it, some will spend it.

Not so brilliant from the taxpayer's point of view, though, because two of the biggest PPI offenders (Lloyds and RBS) are partly state-owned.

And potentially it's not great for people and businesses looking for loans. The less banks have in their coffers, the less they can lend out.

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