Banks that hired additional staff to sort out payment protection insurance (PPI) claims are looking for ways to use these people after claims are eventually settled. Banks like the Royal Bank of Scotland (RBS) and Lloyds Banking Group have spend millions to train and develop these people to handle consumer claims.
PPI Claims Handlers to be Redeployed
The Telegraph is reporting that RBS has hired a small army of staff to handle the estimated £2.2 billion in PPI claims to date. Bank management is looking at ways to deploy these trained people that would add to the bank’s profits.
Lloyds is in a similar situation, having hired about 6,000 people to handle its PPI claims. To date, Lloyds has paid out about £9.8 billion. Senior bank officials there are reportedly holding high-level pow-wows on how to best deploy this trained and now talented staff. Somewhere in the neighborhood of 80 percent of these PPI claim staff at Lloyds are freelancers hired from outside contractors. Most of these contract hires will likely be let go after the PPI mission is completed. It’s rumored that the remainder of the PPI staff, about 20 percent, will be deployed into the bank’s customer service division. These are mostly full-time employees.
As the PPI scandal continues to play out, banking analysts expect that there’s still another year of full-time work ahead for most PPI staff. Victims of the mis-selling scheme who are seeking compensation are starting to taper off a tad. The initial tsunami wave of victims has washed ashore, and their complaints are largely being dealt with.
RBS banking officials are reportedly studying the idea of using its PPI staff in the formation of a new internal watchdog for the purpose of monitoring the sales of its lending instruments and reporting consumer satisfaction, or lack thereof, to the bosses in the executive suites. It’s a good bet, too, that other banks, including HSBC and Barclays, will follow suit and deploy their PPI staffs to some like function as suggested by RBS.
At present, the PPI scandal will likely earn the dubious distinction of being the most expensive faux pax in English banking history. The compensation bill has probably surpassed the £20 billion mark. That amount dwarves the mis-selling scandal that surrounds the interest hedging fiasco which is expected to hit about £3 billion before the dust settles on those compensation remedies. The Financial Conduct Authority (FCA) has drawn a line in the sand and wants the banks to complete the swaps compensation by the end of May.
This, of course, is in contradistinction to the PPI mess where no deadline has been set. The FCA has resisted the deadline date for PPI compensation because officials there fear that some consumers could miss out on due compensation.
Sky News reported that Britain’s largest banks walked away from talks with the City watchdog after it showed tepid support for a PPI deadline. According to Sky News sources, Lloyds is no longer expected to lobby for a time limit on PPI claims. That decision likely means that PPI claimants will still see their claims ripe for some number of years into the future. Lloyds expects that it will see another 550,000 PPI claims that will still need to be adjudicated by the bank’s PPI staff. Bank analysts are reporting that Lloyds has set aside an additional £1.8 billion to pay PPI claims. RBS recently bulked up its PPI account with another £465 million to cover additional PPI costs.
Martin Wheatley, the head of the FCA, appeared before MPs last week and stated that high street lenders had not yet presented a compelling case to set a deadline.
“If you can quickly ensure everyone gets their money and gets it quickly, it would be churlish for us to say no,” said FCA Chairman John Griffith-Jones in a Sky News interview. “But that is a high hurdle.” Besides resistance from the FCA, the banks are also under pressure from consumer groups that are against a PPI deadline.
The message coming from consumer groups is this: Don’t give up. According to the Financial Ombudsman, Lloyds has been particularly mischievous in rejecting claims from consumers who were mis-sold protection insurance. The City regulator recently fined Lloyds £4.3 million for delaying PPI compensation. Those who have been rejected now have an opportunity for a re-review of rejected claims.
LLoyds PPI claims add another £1.8bn to the total compensation bill
The total amount Lloyds Banking Group will expend to handle PPI (Payment Protection Insurance) claims is now reaching £10 billion.
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Tim Capper reports on Financial Mis-Selling for Maple Leaf Financial. Our aim is to ensure you get honest advice and proper guidance to ensure a suitable recommendation can be made to pursue a financial claim
Latest posts by Tim Capper (see all)
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