PPI cash bonanza ‘has turned public into fraudsters’

THE urgency to claim PPI compensation has turned huge numbers of Britons into fraudsters, the chairman of Barclays has claimed.

John Mcfarlane said an “enormous” proportion of claims for compensation over mis-sold payment protection insurance had been bogus, and warned that false claims would surge as the deadline to apply for compensation in August next year loomed. “The percentage of fraudulent claims is enormous. We have turned portions of Britain into fraudsters,” Mr Mcfarlane told The Mail on Sunday.

“It was in the Government’s interests for customers to receive PPI compensation: consumer spending rose and it weakened the banks, so the Government is complicit here in the decline of the City. This is stimulation of the economy by buying flat-screen televisions.”

The latest Financial Conduct Authority figures show that £32.2billion has been paid out to claimants since 2011, with £353 million paid in July.

Banks have set aside billions of pounds in compensation, with Barclays blaming PPI charges for reducing profits in the first half of this year. Consumer groups estimate the total cost of mis-sold policies to be £50billion.

The former Citibank boss said he believed the PPI compensation system had been abused and did not have enough regulation. The average PPI payout is £2,000, although some receive much more. As well as using management companies, customers can make claims directly or via the Financial Ombudsman Service.

Martin Lewis, founder of Money Saving Expert, said Mr Mcfarlane’s comments were a case of the “pot calling the kettle black”.

The financial journalist said PPI was a “horrendous, deliberate deceit and a manipulation of facts”, with bankers pocketing up to 66 per cent commission per policy sold. He told The Daily Telegraph that while there would be a handful of people making fraudulent claims, it was hypocritical of the banks to complain.

He said: “There will be some people on the edge who have made fraudulent claims but in this case this was all started by large banks. Almost everyone was mis-sold PPI in some degree and for the boss of Barclays to make these comments it besmirches the millions of customers who were wrongly sold PPI. I’d suggest his comments are dog whistling, as if to say the whole PPI thing is a big con. The con came from the banks in the first place.”

It is not the first time a banking chief has criticised PPI claims. In 2013, Eric Daniels, a former Lloyds chief executive, said as many as half of claims made to his bank were bogus.

As many as 64million payment protection insurance policies were sold in the UK, some stretching as far back as the Seventies.