PPI compensation rising but still delays in payouts

by Simon Ward on 22 February 2012  |  1 comment
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Nearly £2 billion of payment protection insurance compensation was paid out last year but there are claims banks are not dealing with claims fast enough.

Nearly £2 billion was paid out in payment protection insurance (PPI) compensation last year, according to new figures by the Financial Services Authority (FSA). But this is only just over a quarter of the estimated £7.6 billion banks have set aside for compensation payouts.

Compensation payouts accelerated throughout last year, the FSA says, with a record £441 million paid out in December.

But banks are being criticised for the speed of their payouts. Since 1 January this year, they are permitted eight weeks to respond to claims. However, there is no deadline for paying out the compensation itself. Reports suggest people have had to wait up to six months for their cheques to arrive.

Consumer groups such as Which? are concerned that delays and difficulties in dealing with the banks is pushing more people unnecessarily towards fee-charging claims management companies.

The Financial Services Compensation Scheme, which pays out compensation in the event of firms failing, recently estimated that PPI claimants would pay out £12.6 million this year to claims management companies.

If you want to claim compensation yourself, there’s comprehensive guidance on how to do this in our article How to claim your PPI compensation.

Earlier this week, Lloyds Banking Group cut nearly £2 million from bonuses paid to 13 executives due to the PPI mis-selling scandal. Lloyds has set aside £3.2 billion to cover compensation claims.

Have you claimed PPI compensation? If so, how long did it take for you to receive a payout? Share your experiences in the Comments section below.

More: How to claim your PPI compensation | Six insurance policies that suck!