The financial sector paid out £215m in compensation to victims of the payment protection insurance (PPI) mis-selling scandal in the first half of the year, the City regulator said.
The industry returned £102m in May and June after the British Bankers’ Association (BBA) lost its High Court challenge against PPI compensation rules being applied retrospectively, the Financial Services Authority (FSA) said.
The figures, published to allow firms and consumers to keep tabs on the progress being made with compensation, are based on 16 firms, representing 92 per cent of PPI complaints made in the six months to June.
Huge levels of PPI redress are expected in the coming months as Lloyds Banking Group set aside £3.2bn to cover compensation, Royal Bank of Scotland made a provision of £850m, HSBC recorded a 440 million US dollars (£270m) hit and Barclays allocated £1bn.
PPI covers debt repayments if the holder is unable to work due to an accident or illness, or if he or she loses their job.
The PPI mis-selling scandal is likely to be the biggest the UK has seen, with the final compensation likely to dwarf the £4.5bn paid to people who were wrongly sold personal pensions and the £2.7bn paid to victims of endowment mis-selling. The FSA pledged to publish monthly data on PPI compensation along with a running total.
Margaret Cole, interim managing director of the FSA’s conduct business unit, said the regulator would take action if it found firms were not compensating consumers.
She said: “The treatment of PPI complainants has left an indelible stain on the financial industry’s record. By releasing these figures we’re providing a useful measure of firms’ progress that can be tracked on an ongoing basis.
“While the amount of redress paid in May and June is unsurprisingly large in the wake of the judicial review, looking ahead we expect the amounts to vary somewhat as firms clear their backlogs while dealing with complaints as well.”
The FSA earlier this year granted a temporary extension to the time limit in which Lloyds Banking Group, Royal Bank of Scotland and Barclays had to deal with complaints on the issue due to the huge backlog and high volume of new complaints that the groups face.