The payment protection insurance mis selling scandal is being tipped to have the largest compensation bill in modern history surpassing the pension mis selling scandal of 1994, according to industry analysts.
Lenders have currently set aside £11.5bn to cover the cost of the financial damages from mis sold PPI. However many expect the final total to ring in closer to £15bn; pension mis selling cost lenders £13.5bn.
Lloyds Banking Bank has made the largest provision for PPI redress having earmarked £5.3bn, an increase of £2.1bn from its original estimate. Meanwhile Barclays and Royal Bank of Scotland have both upped their provisions by £700m and £400m respectively. This takes their totals to £2bn and £1.6bn.
Payment protection insurance was sold to customers who took out a loan or credit card and intended to provide repayment cover should they fall ill and find themselves unable to work or if they were made redundant. However many policies were mis sold to customers who couldn’t use it, didn’t want it or weren’t even aware they had it.