The final figure for payment protection insurance mis-selling compensation could end up as high as £4bn, the chair of the parliamentary all party group insurance and financial services group has warned.
In the opening session of the group’s inquiry into the Financial Services Compensation Scheme (FSCS), chair Jonathan Evans said that the final PPI compensation bill would dwarf the current annual levy on insurance intermediaries.
PPI Compensation Claims
“I have heard a figure of £4bn in relation to PPI,” he said, adding that his source for the figure was industry sources.
“My expectation is that in the next few years, a significant figure is going to become a bigger figure.”
Evans added that most of the profits from PPI business have ended up in the banking sector.
“A significant proportion of PPI is carried out to enable them (the banks) to engage in a profitable business.”
He added that the industry had hoped that the review of the FSCS would recognise that liability for compensation should lie where profits had been made.
But he said hopes for short term relief from this quarter had been dashed by the FSA’s decision to delay the review of the compensation scheme.
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