Huge number of PPI claims are bogus, says bank chief
THE PPI scandal has turned “portions of Britain into fraudsters”, the Scottish chairman of Barclays has warned.
John Mcfarlane, from Dumfries, said an “enormous” proportion of claims for compensation over mis-sold payment protection insurance have been bogus.
The latest Financial Conduct Authority figures show £32.2 billion has been paid out since 2011, with £353 million paid in July alone.
Consumer groups estimate the total of mis-sold policies to be around £50bn and customers can continue making claims until August 2019.
Banks have had to set aside billions of pounds in compensation, while Barclays blamed PPI charges for taking a chunk out of profits in the first half of the year.
“It is almost inconceivable to think that £50bn was mis-sold,” Mr Mcfarlane, 71, said.
“The percentage of fraudulent claims is enormous. We have turned portions of Britain into fraudsters.
“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.”
The scale of the PPI scandal and its associated compensation claims has prompted concerns that some unscrupulous claims management companies have abused the system.
As well as using management companies, customers can make claims themselves by complaining directly to their provider or via the Financial Ombudsman Service (FOS).
As many as 64 million PPI policies have been sold in the UK, some stretching as far back as the 1970s.
Policies were added on to products such as personal and business loans, credit cards, store cards, mortgages, catalogue credit and other types of credit such as car finance and hire purchase agreements for household items.
PPI was meant to help people cover repayments if they found they could not pay due to a sudden change in personal circumstances, for example, being made redundant, having an accident, or being ill.
But PPI became controversial as it was widely mis-sold, with people feeling pressured into taking it out, finding it was unsuitable for their circumstances or even finding PPI had been added without them realising it.