October 26 2014 Latest news:
Adam Aiken, Editor
Monday, June 13, 2011
Tens of thousands of Barclays customers are to be offered compensation on a “no-quibble” basis following the payment protection insurance (PPI) mis-selling saga.
Barclays, which said complaints made up to April 20 would be settled as an act of goodwill, is the first of the high-street banks to make such a move, but it is likely that others will follow suit.
The long-running row over PPI has seen the banks’ reputations take a hammering, and they face an even bigger hit in terms of financial cost. Some estimates have put the total amount of compensation to be paid by the industry at about £10bn.
In April, the banks lost their case against new regulations introduced by the Financial Services Authority (FSA). Although the British Bankers’ Association said it might appeal, Lloyds Banking Group threw in the towel last month, quickly followed by the other banks. The latest move by Barclays means many customers could receive their compensation sooner than expected.
“The quickest way for these banks to clear the backlog is by paying up, so we’re pleased that Barclays has chosen to settle all complaints that it put on hold while this went to court,” said Which? chief executive Peter Vicary-Smith.
“It’s now up to the other big banks to follow suit and quickly reimburse customers who are entitled to compensation.
“Banks also need to start the process of reviewing the thousands of complaints that they have unfairly rejected over the past few years.
“Even without the delay caused by their legal action, some banks have a terrible record for dealing with complaints within the regulator’s eight-week timescale. Until these firms are hit with substantial fines they have little incentive to change their inefficient practices.”
PPI is designed to cover debt repayments if a policyholder is unable to work because of an accident, illness or job loss. But many people who have bought PPI have been mis-sold it.
Common complaints have been that it was sold to consumers who would never be able to claim on it while other people felt pressurised into taking it out alongside loans or credit cards. Some people did not even realise they had bought the product.
Andrew Hagger, of Moneynet, said: “The decision from Barclays is a common-sense move and one that I hope other lenders will follow.
“It’s been a seemingly endless stream of bad news as far as PPI is concerned, but it looks as if the tide is now turning in favour of the customer at long last. A speedy resolution is in the best interest of all lenders whose reputations have been undoubtedly tarnished by this sorry episode.”
In a separate development, the FSA said it had granted Royal Bank of Scotland (which includes Natwest) and Lloyds more time to deal with the backlog of PPI complaints. They now have until the end of August to sort out claims that were put on hold while the judicial review was under way.
It remains to be seen whether RBS and Lloyds will take advantage of this extension or fall into line behind Barclays.