Bank boss: 90% of claims for PPI payouts are fake

AT LEAST nine out of ten compensation claims in the PPI scandal are fake, a high street bank boss has claimed.

With the deadline for compensation looming at the end of this month, banks are being deluged with last minute claims.

The top bank executive, who asked not to be named, said just ten per cent of claimants ever had a payment protection insurance (PPI) policy.

The insider stressed that not all of this group had been victims of misselling, but banks are paying most of them anyway because it is too timeconsuming and costly to vet them properly.

The comments came as Royal Bank of Scotland and Santander revealed they had seen a huge spike in complaints ahead of the August 28 deadline.

Lloyds said it is getting 190,000 a week. And Barclays bosses hit out at a flood of ‘vexatious’ complaints made by unscrupulous claims management companies.

It is thought banks are employing as many as 20,000 people to handle claims.

The bank boss said: ‘Everyone in the industry is suffering exactly the same pain – as the deadline approaches we’ve seen requests doubling, trebling or even quadrupling. But the quality of requests has worsened and it’s fair to say that perhaps just ten per cent are legitimate.

‘If you were sold PPI during a specific time period and we know misselling was happening at that point, we will pay you.

‘If you’ve got to deal with thousands of claims a day then you really do have to create the processing power and that means a large amount of automation.’

PPI is the biggest misselling scandal in banking history and has so far cost the industry £35.7billion – enough to fund Britain’s annual public order and safety budget.

Millions of people were sold PPI policies, mostly between 1990 and 2010, designed to cover repayments on loans and credit cards if a borrower was made redundant or found themselves unable to work.

However, many did not know what they were buying or how much it was costing them.

The floodgates for compensation were opened in 2011 when the banks lost a landmark court case, spawning an army of claims management companies willing to handle the paperwork for victims in exchange for a cut of their payouts. These firms have since spent millions on TV and radio adverts. They have been accused of submitting vast numbers of false claims to push banks into paying up.

In a bid to draw a line under the saga, the Financial Conduct Authority watchdog imposed a deadline of this August. It has run a campaign featuring Terminator star Arnold Schwarzenegger to warn consumers of the final date, paid for with £42million provided by the banks.

The industry insider said: ‘Claims management firms sign up everyone they can and then basically send you a phone book and ask you to check every single name, regardless of whether they banked with you or not.’

Lloyds has around 6,000 workers dealing with complaints, suggesting the industry as a whole is likely to employ around 20,000 to process claims.

Ross McEwan, chief executive of RBS, said yesterday: ‘We’re seeing a big uptick in the number of claims. It’s nice, from an industry and a customer perspective, to see an end.

‘I’m sure everyone is sick and tired of seeing these adverts.’

Consumer group Which? said its online PPI-checking tool was used by a record number of people last month, up 67 per cent from June.

‘Relieved to see this ending’