PPI claims scan­dal un­likely to be reignited de­spite court rul­ings, say bank­ing an­a­lysts

The Daily Telegraph - Business - - Business - By Lucy Bur­ton

BANK­ING an­a­lysts have poured cold wa­ter over fears of a new avalanche of pay­ment pro­tec­tion in­sur­ance (PPI) claims af­ter court rul­ings that sug­gest all cus­tomers who bought the toxic prod­uct were un­fairly treated.

Ex­perts said that the scan­dal is un­likely to be reignited – de­spite sev­eral de­ci­sions which forced banks to re­fund cus­tomers their PPI pay­ments be­cause of huge com­mis­sion fees, even if the prod­uct was not mis-sold.

A com­pen­sa­tion dead­line for cus­tomers who were sold PPI un­der false pre­tences passed last sum­mer. The prod­uct was meant to pro­tect con­sumers from loan pay­ments if they were un­able to work, but was fre­quently flogged to those who did not want or could not use it. The mis-sell­ing scan­dal has al­ready cost UK banks £38bn.

An iso­lated se­ries of court cases have also led to rul­ings that even when a cus­tomer got the prod­uct be­cause they wanted it, huge com­mis­sion fees meant the PPI deal was un­fair and the client was en­ti­tled to their money back.

How­ever, bank an­a­lysts and in­dus­try in­sid­ers said that although lenders can be chal­lenged in court if an un­fair re­la­tion­ship ex­isted, they are not ex­pect­ing a sec­ond PPI rush.

Three bank­ing in­sid­ers said there was no ex­pec­ta­tion in the in­dus­try that re­cent county court claims could trig­ger an­other com­pen­sa­tion scheme, as cur­rently each case must be fought out in­di­vid­u­ally. Ian Gor­don, a banks an­a­lyst at In­vestec, said: “We are not yet aware that costs in re­la­tion to th­ese cases will be ma­te­ri­ally dif­fer­ent to banks’ ex­ist­ing as­sump­tions and we’re not talk­ing about a new wave of claims, just the tail costs of set­tling ex­ist­ing claims. There’s no new claims process, [just] an ex­ist­ing bank of claims ei­ther be­ing set­tled through the in­di­vid­ual banks’ claims process or lit­i­ga­tion within ex­ist­ing pro­vi­sions.” A spokesman for NatWest Group, for­merly known as RBS, agreed and said what it has set aside so far for PPI is al­ready in­tended to over fu­ture costs.

The fears over a new wave of PPI pay­ments have resur­faced a year af­ter claims lawyers told The Daily Tele­graph that th­ese rul­ings could lead to fu­ture pay­outs.

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