Payment Protection Insurance refunds short by up to £1billion

An investigation by the BBC into under-paid compensation has revealed a £1billion shortfall in compensation payments. The revelation is yet another nail in the coffin of the UK banking industry’s reputation.

First it was the bail-out, then not passing on the low interest rate, then mis sold PPI and now low refunds. The financial consumers affected are those with a PPI policy alongside a credit card issued by:

– Barclays

– Capital One

– MBNA; and

– Lloyds Banking Group

The estimated shortfall has occurred because banks didn’t consider fees and charges attached to the mis-sold policies when issuing a refund cheque.

Use a free PPI calculator to check what you’re owed

This issue highlights the importance of knowing how much you’re owed before you start a claim. If you know how many premiums you paid, are aware of all the related fees and charges and know what interest you should have on top, then you know exactly what amount should be on the refund cheque. The best way to work this out is to use a free PPI claims calculator or similar tool available either online or over the phone.

A PPI calculator will ask you for the loan amount, term and interest rate then tell you how much you are owed. All you have to add in is any fees, charges and interest and you have a total compensation amount.

‘an appropriate refund’

Speaking about the investigation’s findings, Lloyds Banking Group said: ‘When a customer lets us know that they may have incurred other costs because of their PPI policy, we will investigate and make an appropriate refund’.

MBNA commented: ‘We are confident that our redress is correct, we have considered our methodology carefully and in detail and our confidence is reinforced through external independent reviews’.

£50bn worth of PPI policies

Some of the other banks in question are also pleading their innocence, Barclays says its month-by-month assessment of whether a PPI policy payment had led to additional fees met industry regulations. It also claims that the data gleaned from assessments was independently checked and verified.

If you believe you’ve been under-refunded and are owed more money back from mis sold PPI, the advice is to contact the bank and enquire about it. Failing that, make a new complaint and if they still won’t play ball – go to the Financial Ombudsman. Remember the Ombudsman estimates that banks sold £50bn worth of PPI policies and they’ve only paid out £15bn so far – don’t let them keep you money.