By Simon Watkins
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Britain's banks, weighed down by tens of millions of pounds of bogus demands for payment protection insurance compensation, are to call on Justice Secretary Kenneth Clarke to clamp down on unscrupulous claims management companies.
A meeting last week between the banks, regulators and consumer watchdogs agreed to fight back against claims companies that are blamed for clogging up the system.
The banks estimate they will have to pay out about £7billion for genuine compensation claims, but it is estimated that one in four of the complaints are false â€" with some made on behalf of people who have never even taken out a loan from the bank in question.
Bogus: It is estimated that one in four of the compensation claims are false
Many of the claims companies are the same ones that have been drumming up personal injury and accident claims â€" an issue already highlighted by The Mail on Sunday’s Stop Taking Us For A Ride campaign.
Banks, other finance firms, the Financial Ombudsman Service, consumer lobby group Which? and moneysavingexpert.com are drafting a letter to Clarke to call for tougher regulation for claims companies.
Banks face billions of pounds in compensation claims after years of mis-selling PPI, which was supposed to repay customers’ loans if their income dropped because they fell ill or lost their jobs. But hundreds of thousands of people were mis-sold the policies.
The claims firms have been criticised for taking a huge cut â€" often as much as 25 per cent â€" of the compensation sum. Barclays last week earmarked an extra £300million for PPI claims.
This week, Royal Bank of Scotland, which is 83 per cent-owned by the taxpayer, may raise provisions by a similar amount. RBS will report first-quarter results this week, and even without the extra payment protection insurance payout it is set to show a pre-tax loss, but the underlying picture is likely to show a strong improvement.
Lloyds, which is 41 per cent-owned by the taxpayer, has already set aside £3.2billion for claims â€" more than any other bank. It is still in talks with Co-op about the sale of 632 branches, but last week announced the talks were no longer exclusive, leaving the way open for a bid from rival NBNK.
Loyds has given NBNK three conditions to meet before it will open talks. It must show that the Financial Services Authority has raised no concerns over its capital and liquidity plans for the merged bank.
NBNK must also show that the regulator is happy with its technology and business plans. And it must detail its plans to raise capital from investors in order to complete the deal.
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So theyre squealing so what, muggers in suits let them squeal !
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A publication aimed at consumers is siding with the banks? The banks who stitched up millions of consumers? Unbelievable
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The banking sector weren't so quick to go crying to the regulators when they themselves have been dishing out bogus self certification liar mortgages by the million.
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Too right That they should stop these false claims clogging up the system. For every penny these banks payout, guess where they're getting the money from? All those people who have mortgages, loans etc. They're forcing up the prices on all of us - the government should set a date to claim by and be done with this. If we just keep knocking our banks, we'll never end up back to prosperity as these are the very people we need to help lead us out of this. Or keep knocking them and we'll all get nowhere!
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So the bank don't like being scammed then.... Bet they want the police to act when they are scammed though. Different justice for different classes?
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