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Banks too slow to settle PPI claims, says Which?

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Which? has warned that banks are pushing borrowers into the arms of claims management firms by taking too long to settle payment protection insurance claims.

Last week the Financial Services Authority revealed that banks paid out £1.9bn in PPI redress last year. Payments hit £441m in December 2011, which also saw the highest monthly number of PPI payouts.

But Richard Lloyd, executive director of Which?, says banks are paying out less than a quarter of the £7.6bn earmarked for refunds.

He says: “Too many people still find the claims process too lengthy. The banks must streamline the process to make it easier to claim.

“Otherwise this leaves an open goal for claims management firms that charge people a hefty fee for putting in a claim, which they could easily do themselves for free.”

Claims management companies accounted for almost half of all cases received by the Financial Ombudsman Service during 2011. It receives 1,000 new PPI complaints every day, most of which relate to PPI sold by banks, attached to credit cards and loans.

It upholds about three in four cases in the consumer’s favour with compensation averaging £2,750.

The increase in complaints is a result of the High Court ruling last April in which the British Bankers’ Association lost an appeal to overturn the Financial Services Authority’s rules for compensating victims of mis-sold PPI.

A spokesman for the BBA says banks are working through the increased level of PPI complaints following the ruling.

He says: “Increased volume reflects the way additional claims made following the court ruling are feeding through the system. Banks largely no longer provide PPI policies. Customers who believe they have been mis-sold PPI should contact their lender directly.”

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Readers' comments (2)

  • I have been waiting on my payout from the bank for 7 months. I made a claim 2years ago it was up held by fos in september 2011 and still no refund

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  • I have made 2 PPI claims, one against LLoydsTSB, which to be fair paid up quite promptly. The other is Halifax, I have been waiting months now for my refund. It has gone over the initial 12 weeks, the additional 30 days and also an additional 28 days for them to esculate the claim and still no joy. I have recently complained to the financial ombudsman, but this could take a further 2 months. I am really fed up now of waiting. Banks are so quick to take the money of of us, but are not very quick at paying it back!! Anyone got any ideas how to speed up Halifax paying my money back to me???

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