Banks have been having a tough time answering to the customer’s calls to the PPI claims that have been a matter of rage since a long time now. With a rise in the customer complaints, claims, and the money to be repaid to customers, banks have been struggling to maintain their cool and the liabilities have been seeing an unmanageable situation. The problem is about the PPI that has been a matter of concern both for the insurance companies as well as the banks as customers enjoy the rightful acknowledgment of money from both.
The Payment Protection Insurance and its Effect
PPI was introduced as a means to safeguarding the customers with the ease of paying their monthly instalments and loan repayments when they are unable to work for some reason. This insurance plan included the people who had been on a temporary leave, illness, accident or unemployment due to valid reasons. The ease of luring the customers to sign for the insurance plan and the mis-selling of the plan to customers who had absolutely no need of these plans led to a huge popularity signing up for the plan when they had no use of it. These sign-ups made it ineligible for the customers to claim on the policy while it being useless for them. The complaints soon started coming up with a compensation which averaged at about 3000 Euros.
The Liability of the Banks with Respect to PPI Claims
The banks have been in a juggle ever since the introduction of the PPI and the fact that there is a rise in the claims and complaints have led to the ultimate breakdown of their financial situation. With outstanding claims and compensations which have to be refunded totalling to almost 16 billion Euros, banks are facing nightmares of the fund shortage and cash crunch in them.
The office of the Ombudsman has reported that in the contempt of claims, almost 85% of the cases are ruling for the customers and banks would soon come under a compulsory liability of paying off to the customers their PPI claims with legal backing.
The number of customer complaints and compensations is expected to increase further with banks coming under the compulsion to pay off the liabilities and bring their Balance Sheet regularized as soon as possible. The hike in PPI claims is taking away the peace and tranquillity of the bankers and alternative methods of maximizing cash and reducing the claims have been tried.
James Sherer takes a view on the current situation where banks are trying hard to cope with the insurance claims. The claims related to PPI are on the rise which the banks have tried alternate methods to fight with.