1.5 million people reclaim PPI from Barclays
Over 1.5 million customers have made claims against Barclays for mis-sold payment protection insurance (PPI), with the average pay out worth £1,808, according to the bank’s end of year accounts, published today.
The figures, which exclude claims from people who never held the product, show that 86% of PPI claims were upheld in consumers’ favour in 2015, significantly higher than the figure for the previous year, which was 79%.
As a result, Barclays had to increase the money it put aside for claims by £2 billion in 2015. It has now allocated a massive £7.2 billion to compensate customers for mis-selling the flawed insurance product.
Barclays says the extra money allocated for PPI provisions reflects a “slower than expected decline in claims volumes during 2015”, as well as a potential 2018 deadline for PPI claims that’s being considered by the financial regulator.
Do you have a PPI claim?
Barclays’ accounts state that it has tried to proactively contact 680,000 customers regarding PPI policies, but only a quarter of customers (28%) have replied.
Though the average compensation paid by Barclays was £1,808, this includes redress paid through claims management companies, which can take up to a quarter of the money, according to recent estimates from the National Audit Office.
But don’t be tempted to submit a claim via a claims management company.
If you’ve taken out a loan, credit card or mortgage, check your records or contact your lender to see if you have a PPI claim. Read our checklist of people who may qualify for compensation – this info includes a template letter to make the reclaiming process as easy as possible.
If this doesn’t work, you can take your gripe to the free Financial Ombudsman Service.
And don’t think the issue just affects Barclays’ customers. Lloyds and RBS published their 2015 PPI claims figures last week, revealing they’ve put aside more than £20 billion to repay customers – equivalent to more than £300 for every person in the country.
Bad news for investors
Barclays’ shareholders were badly hit this morning, with the company announcing it will slash its dividend by more than half to 3p in light of falling profits. Shares were trading around 10% lower than at the start of the day at 154.5p at midday.
The practice of a dishonest salesperson misrepresenting or misleading an investor about the characteristics of a product or service. For example, selling a person with no dependants a whole-of-life policy. There have been notable mis-selling scandals in the past, including endowment policies tied to mortgages, employees persuaded to leave final salary pensions in favour of money purchase pensions (which paid large commissions to salespeople) and payment protection insurance. There is no legal definition of mis-selling; rather the Financial Services Authority (FSA) issues clarifying guidelines and hopes companies comply with them.
Payment protection insurance is designed to cover you should you fall ill, have an accident or lose your job and can’t make repayments on loans or credit cards. However, research by consumer watchdogs found the cover to be overpriced, filled with exclusions (policies exclude self-employment, contract employees and pre-existing medical conditions) and were often mis-sold because the exclusions were never fully explained. In May 2011, the High Court ruled banks had knowingly mis-sold PPI and ordered them to compensate around two million consumers.
If you’ve have a complaint about a financial service product you have bought but the company you bought it from refuses to resolve your problem after eight weeks, the Ombudsman can help. The Ombudsman will investigate and resolve the matter. The Ombudsman is independent and its service is free to consumers. The Ombudsman may find in the company’s favour but consumers don’t have accept its decision and are always free to go to court instead. But if they do accept an Ombudsman’s decision, it is binding both on them and on the business.
If you own shares in a company, you’re entitled to a slice of the profits and these are paid as dividends on top of any capital growth in the shares’ value. The amount of the dividend is down to the board of directors (who can decide not to pay a dividend and reinvest any profits in the company) and they will be paid twice yearly (announced at the AGM and six months later as an interim). Dividends are always declared as a sum of money rather than a percentage of the share’s price. Although dividends automatically receive a 10% tax credit from HM Revenue & Customs (HMRC), which takes the company having already paid corporation tax on its profits into account. Dividends are classed as income and, as such, are liable for personal taxation and so shareholders have to declare them to HMRC.
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.
Claims management companies
Regulated by the Claims Management Services Regulator since 2006, claims management companies offer advice and legal services in respect of claims for compensation, restitution, repayment for loss, damage or negligence. To many, the term is merely a polite euphemism for “no win, no fee” law companies. If you feel they offer services you need, approach with care.