Banks may be complaining about PPI Claims, the FSA may be complaining about PPI Claims but the economy needs PPI Claims !
PPI Claims and the Economy
With approximately £ 10 billion have been set aside by Banks to cover mis-sold PPI Claims that were sold to consumers over the past decade, this may prove to be the boost that the economy has needed.
The National Institute of Economic and Social Research (NIESR) said that even by a conservative estimate, a £10 billion PPI payout in 2012 could have the effect of raising GDP by 0.1%.
Simon Kirby, a senior research fellow at the institute, said: “PPI payments are a boost to household finances which are broadly the same as having a temporary tax cut.”
Jonathan Portes, NIESR director, said the effect of the PPI windfalls was greater at a time of recession: “From an economic point of view, the timing of these payouts is quite good. This is a good time for the money to be flowing into the economy.”
The GDP figures emerged as a result of research by the Financial Times, which spoke to Elaine Overten, a retired nurse from Derbyshire, who received compensation for PPI payments made on her mortgage.
PPI Claims in 2012
Some £4.8 billion in PPI compensation had been paid out by May this year and £5 billion is still to be claimed, according to consumer group Which?. The body has been campaigning to make it easier for people to make claims directly rather than use claims management companies which often take a quarter of any payout.
The British Bankers’ Association confirmed in May last year that it was not going to appeal against a High Court ruling that rules relating to the mis-selling of PPI could be applied retrospectively. The Financial Ombudsman Service (FOS) has said it expects to settle a record number of PPI cases this year at around 130,000.
Guest post By :+Tim Capper