Banks fail to restore customer trusts as PPI compensation payout delayed

After mis selling millions of payment protection insurance policies to customers who couldn’t use, didn’t want or didn’t even know about, banks are again failing to provide even an adequate level of customer service with delays to PPI compensation payouts.

Money Mail has received letters from a number of frustrated customers who, having received confirmation that their claim for mis sold PPI were successful, are still waiting for their money. Whilst the problem is applicable to many lenders, PPI mis selling giant Lloyds TSB received a significant number of letters.¹

Lloyds Banking Group was prolific in the PPI mis selling scandal, having set aside £3.2bn to cover the cost of PPI compensation claims.

The state-backed bank however is not alone; Royal Bank of Scotland, NatWest and Barclaycard have all admitted breaching a ‘gentleman’s agreement’ to pay compensation within 28 days to the customer.

The news comes as the banks desperately try to rebuild relationships with customers. Adam Phillips, Chairman of the Financial Services Consumer Panel fears any progress made in restoring consumer faith in the financial services industry have been dashed by these PPI compensation delays:

“It is very worrying that after so much criticism over PPI, banks and other financial institutions are still not compensating customers quickly. If the financial services industry wants to regain consumer trust, then it has to clean up its act.”¹

Many customers who were mis sold payment protection insurance had their complaints put on hold by lenders as the subject of PPI complaint handling went in front of the High Court. Following the ruling back in April, the FSA set deadlines for selected banks to respond to all complaints.

A spokesperson for Lloyds TSB apologised for any delays:

“We are processing all PPI compensation payments within a reasonable turnaround time. However, we have encountered a one-off processing issue which has delayed payments for a group of customers with a Lloyds TSB loan. That backlog has now been cleared and 80 per cent of customers affected have received their full payment.”¹

¹This is Money (Nov 2011)

Content correct at time of publication