FAQ: Payment Protection Insurance FAQ's
Average Payment Protection Insurance Claim Amounts
With a large number of lenders having been penalised for the mis-selling of PPI policies, many borrowers are finding it easier to lodge their claims. This means that more people could find they have access to the funds which were wrongly deducted in the first place, but just how much is the average PPI claim amount?
Of course, there is no exact figure for this and the amount of money which is paid out in a PPI claim will depend on a vast number of factors. The case may be handled by a PPI claim firm, who will act on behalf of the claimant when pursuing the case, but this is a choice the claimant has.
What is paid back?
Successful PPI claims offer those affected compensation, which is made up of various factors. This compensation is made up of both the money paid for the policy but also interest upon that amount at a rate of 8 percent.
What are the average claim amounts?
Seeing as there is no limit on the number of claims which an individual can make, those affected could receive a greater total when claim amounts are combined.
The reason why there are no limits or restrictions on the number of claims which can be lodged by an individual is because they may have received any number of loans or financial agreements over the affected period.
PPI was commonly mis-sold with loans, mortgage agreements, credit cards and any other form of credit agreement. As the vast majority of major banks and services were found to have been involved in this, individuals could therefore be facing a limitless number of potential claims.
This is perhaps one of the reasons why so many claims have been lodged since the situation was exposed in 2006 – following an investigation by the Office of Fair Trading (OFT) and the Financial Services Authority (FSA), and a formal complaint from the Citizen’s Advice Bureau (CAB).
Since 2005, 1.5 million cases have been recorded by the FSA. In some cases, the claim will be referred to the Financial Ombudsman Service (FOS) which works independently of other services.
The FOS reviewed over half a million cases in 2010 and has predicted they will receive 285,000 new cases over 2012.
In order to cope with the payments associated with successful claims, many banks set aside funds to help them meet the required repayments.
A report in 2011 revealed Barclays had set aside £1billion whilst HSBC put aside just £270million. The Royal Bank of Scotland initially set aside £200million before allocating a further £850million, putting their grand total to just over £1billion.
For those who feel they may be entitled to claim for mis-sold PPI it is important to remember that the length of the original loan agreement and the value of it will affect your payout – if your case is settled favourably.