PPI Claims against banks has reached a record high due to banks mis-selling PPI insurance to consumers, and in many cases without the consumers knowledge.

So who is to blame for this error, and who should have stepped in to cut the losses sooner? One major prominent figure to step up and speak out on the issue was BBA’s Eric Leenders, who claimed the banks had complied with regulations which were in place at the time, and if the insurance industry had stepped in and had questions over legitimacy of the sales practices the banks were using, they should have stepped in and stopped the banks when the errors were occurring.

This claim by BBA is correct; the insurance companies were aware of the increase in sales of PPI during the height of the mis-selling scandal, and by them stepping in and questioning the banks when these scandals were occurring, they could have saved thousands of consumers from being scammed, and being charged for these PPI policies which they were unaware of.

Although the blame placed on the insurers is still questionable, and the extent of their error is debatable, if they had stepped in sooner, many consumers could have been spared these costs.

Due to the high volume of complaints and claims which banks have been getting after the judicial hearing early in 2011, HSBC has been allotted extra time by the Financial Services Authority (FSA) to deal with the claims and complaints which they cannot keep up with, due to the millions of filings by consumers in regards to PPI insurance claims.

Mid June, 2011, the FSA allotted certain banks extra time to pay out on these claims, which are coming in by the thousands per week. Normally banks have 8 weeks to pay out, or at least reply to a claim, however, tens of thousands of claims have been put on hold (due to the court proceedings), therefore these banks have been given extra time to deal with PPI claims which were on hold, and the claims which are currently still coming in. The new complaints which are coming in (after the judicial review hearing in April), but which are received before August 31 of 2011, must be handled by the banks within a period of 16 weeks. Those received after (at the end of August), must be dealt within a 12 week period; and, anything after this time period banks have the normal 8 weeks to handle.

It is a wise move by Barclays to settle the numerous claims relating to their administration of the popular Payment Protection Insurance plans’ customer complaints.

They can well afford to since their bottom line has been greatly swelled by the program. In the future, the consumer can only hope that these will be the last such considerations that they will need to render. Banks in general are not of the greatest repute at this time. Barclay’s patrons and the grand legacy of the firm deserve better.

Going forward with new consumer protections in place will be a positive step. How it got this far is not a complimentary reflection on the banking industry, nor on those whose profession is it to oversee its ethical operations. Payment Protection Insurance is an important feature of the modern home mortgage and so must continue, under the same moniker or with a fresh, untarnished title. With the enhanced volatility which the new global marketplace engenders, homeowners need some, well, insurance that their insurance won’t evaporate with the natural and unnatural ebbs and flows of our hard won free market system. The Payment Protection Insurance option, or a similar system for helping the harried homeowner, must be administered in a more forthright manner.

PPI Claims cost banks billions which they must pay out in compensation, and shows how the mis-selling has become out of hand.

However, the Ombudsman Services (FOS) claims that mis-selling was not going unnoticed in the insurance industry. So, who should have intervened to prevent the scandal from reaching the magnitude, and affecting so many consumers nationwide, at an early stage?

The FOS, claims that the insurance industry is partially responsible for flagging and preventing the bad behaviour, and should have stepped in to prevent the amounts of bad selling channels in the marketplace. Although banks were heavily criticised for the way in which PPI mis-sellings were occurring, the insurance sector has been viewed as less culpable, although it had knowledge that mis-sellings were occurring.

ABI director agreed with the FOS’s conclusion, and claimed that insurers had a responsibility and obligation, to ensure their policies are sold in compliance with FSA/FCA requirements, and that these insurance companies should have intervened to help cap and stop the mis-sellings before they had affected so many consumers nationwide.

Whoever is responsible for so many mis-sellings, claimed the FOS, the allowing of visible mis-sellings to affect so many consumers, and to continue for so long, will not be acceptable in the future.