PPI claims 'underpaid by £1bn' as banks ignore fees
Lloyds, Barclays, MBNA and Capital One accused of ignoring fees and charges in PPI compensation
An investigation by the BBC has found some banks have underpaid customers when compensating them for mis-sold PPI (Payment Protection Insurance), with one expert saying the total amount still owed is as much as £1bn.
The banks in question – Lloyds Banking Group, Barclays, MBNA and Capital One – have repaid customers the premiums on mis-sold policies, plus interest, but have not included fees and other charges triggered by the policies.
The banks all told the BBC they had made every effort to pay the right compensation, but one expert in the field told the corporation he believed they collectively owed customers as much as £1bn for fees and charges.
One customer, Mark Pascoe, was paid £5,800 of compensation by credit card firm MBNA in February. According to a claims management company advising him, they should have paid him more than twice that amount – £13,000.
Pascoe said: "It's absolutely outrageous. That's almost robbery, isn't it? They should be fined big time."
Lloyds said in a statement that it would investigate if a customer brought its attention to a shortfall in compensation – but regulators told the BBC banks should be including fees and charges as a matter of course.
Martin Baker, chairman of Renaissance Easy Claim, a company which claims PPI compensation for customers, said ignoring fees was "just another way by which the banks and lenders were trying to reduce their compensation bills".
Barclays admitted its previous system for working out compensation had not properly taken the cumulative effect of fees and charges into account but said it was introducing a new "enhanced" method which "will enable us to move from a monthly to a cumulative assessment of fees".
Former PPI industry insider Cliff D’Arcy estimated the combined shortfall for the BBC. He said: "I'm confident that the figure will be somewhere in the region of £1bn of extra compensation."