The billion dollar question: PPI payouts could have £1bn shortfall
One expert, commissioned by the BBC, estimates it could amount to “somewhere in the region of £1bn”.
The customers potentially affected had PPI on credit cards issued by Lloyds Banking Group, Barclays, MBNA and Capital One.
All claim to make every effort to pay a correct amount of compensation.
The extent of the shortfall is difficult to assess.
The shortfall in compensation arises because, although these banks all refunded the premiums on their mis-sold PPI policies plus interest as regulators require, they have been failing correctly to refund additional charges which were triggered by the premiums of the mis-sold PPI policies.
This failure to include fees and charges in compensation calculations has resulted in dramatic reductions to the amounts some customers have received.
All of the banks concerned declined an invitation to be interviewed on how their compensation calculations work and why they are not fully including the effect of fees and charges, as regulators require.
In a statement to the BBC, 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.”
Regulators have told the BBC that such fees and charges should be included in the initial offers that banks make.