Payouts accelerate as banks struggle to deal with complaints.
Over £1 billion compensation was paid out between January and October this year to people who were mis-sold payment protection insurance (PPI).
The figures from the Financial Services Authority (FSA) show that £268 million was paid out in October alone. This was the biggest amount of the year so far and suggests the amount of compensation is going to continue to accelerate.
The money was paid out by 16 firms, although the FSA has not revealed who they are. Banks have set around £6 billion aside to meet compensation payments.
The banks lost a High Court test case back in April and are obliged to review all past PPI sales.
However, it’s emerged that some compensation payouts that have paid back lost interest could be subject to tax. This does not affect the compensation payout themselves, only the interest.
There have also been reports of delays in payouts from Lloyds TSB and NatWest/Royal Bank of Scotland. From 1 January, banks will have eight weeks to settle all complaints. It’s estimated that one million people have submitted complaints.
If you think you’ve been mis-sold PPI, you can make a complaint to the company that sold you the policy. For more information, go to the Financial Ombudsman Service website
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