PPI has become a black mark on banks. The problem seems to have arisen from banks offering commission to staff that signed up customers to PPI on their loans, without staff having proper training on what this entailed, or the legality of its sale. Basically an awful lot of people ended up paying for something they didn't need, or thought they had to buy as part of the loan. Even worse, some people weren't told they were signed up for policy insurance at all, and only learned of it after the scandal broke.
As you might expect, the bubble burst, but that's left something of a problem in its wake. The banks have been ordered to repay all mistakenly sold PPIs, but this leads to a massive bureaucratic quandary in terms of processing all those people and getting the money to them. There have been over a hundred thousand complaints, and ombudsmen are reporting that the amount could see a further 25% rise. Frustratingly there have been a lot of dodgy claims springing up. Cold calling companies have given commission to workers for getting as many claims as possible, and that's led to some claims from people that definitely weren't mis-sold PPI. This has meant the process getting severely bogged down.
But the banks are coping. The strategies for dealing with this are fairly simple, as are the incentives. The banks have had to take on a lot more staff to process the claims, matching the influx of new staff into ombudsmen's offices to pass on claims. The incentive for them processing things quickly is that banks are being fined for dragging their feet. The combined fine of The Bank of Scotland and Lloyds so far has reached almost sixty million pounds.
In order to cope with all that's happened the banks have needed to set aside a great deal of money. Barclays alone revealed that they have 1 billion set aside just for the task of repaying people on PPI claims. But it's not as if the banks will really suffer as a result. Costs are passed on to bank customers, and one way or another they still end up coming out on top.
Hopefully the problem should be resolved soon, and it seems as if banks are coping well with it, after a lot of prodding in the right direction.
As you might expect, the bubble burst, but that's left something of a problem in its wake. The banks have been ordered to repay all mistakenly sold PPIs, but this leads to a massive bureaucratic quandary in terms of processing all those people and getting the money to them. There have been over a hundred thousand complaints, and ombudsmen are reporting that the amount could see a further 25% rise. Frustratingly there have been a lot of dodgy claims springing up. Cold calling companies have given commission to workers for getting as many claims as possible, and that's led to some claims from people that definitely weren't mis-sold PPI. This has meant the process getting severely bogged down.
But the banks are coping. The strategies for dealing with this are fairly simple, as are the incentives. The banks have had to take on a lot more staff to process the claims, matching the influx of new staff into ombudsmen's offices to pass on claims. The incentive for them processing things quickly is that banks are being fined for dragging their feet. The combined fine of The Bank of Scotland and Lloyds so far has reached almost sixty million pounds.
In order to cope with all that's happened the banks have needed to set aside a great deal of money. Barclays alone revealed that they have 1 billion set aside just for the task of repaying people on PPI claims. But it's not as if the banks will really suffer as a result. Costs are passed on to bank customers, and one way or another they still end up coming out on top.
Hopefully the problem should be resolved soon, and it seems as if banks are coping well with it, after a lot of prodding in the right direction.
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