Kamran Mirshahi is the Director of Canary Claims. Offering one of the lowest fees for PPI claims, Kamran has watched the PPI scandal develop. He wants to promote the PPI deadline so that all customers can claim back the money they are owed within plenty of time.

The PPI scandal has plagued the banks for nearly a decade now. The banks have gradually been increasing their total amount put aside to deal with the misselling fiasco. Since 2011, they have collectively paid over £27 billion to customers.

With the PPI deadline now firmly in place for 29th August 2019, the banks can slowly start to breathe a sigh of relief. However, the relief shouldn’t come too quickly, as they still face 22 months of complaints.

The Financial Conduct Authority (FCA) has spent £42 million on the deadline campaign. It’s hard to miss the campaign if you watch any television. Arnold Schwarzenegger’s head pops up, shouting at customers to “Do it Now!” — meaning it’s time to decide if you’re going to make a PPI claim, because time is running out.

Will There Be an Influx of PPI Claims Now?

While it’s still too early to know the exact figures about the increase in PPI claims, we can start to see a slight rise in complaints. The chief executive of the Financial Ombudsman (FOS) said that they are already starting to see an increase in the number of complaints.

If we look at the figures from the FCA, May and June saw an increase of money being paid out for PPI claims. This correlates with the announcement of the PPI deadline. The official promotion started in August, meaning the figures could rise dramatically at the beginning of 2018.

While the banks are ever increasing their PPI provisions, nobody yet knows if they will need to set aside even more money. By the end of the year, we should be able to see the figures and understand the extent of how much the PPI deadline campaign is reaching consumers.

How Detrimental Has the PPI Scandal Been for the Banks?

The banks have paid back £27 billion for PPI claims to customers. However, the total cost of the PPI scandal is over £37 billion. This total includes paying extra staff to deal with complaints and the numerous fines from the FCA to individual banks.

Lloyds Banking Group has been hit the hardest. The banks have frequently been topping up their PPI fund. They set aside another £350 million at the start of the year for mis-sold PPI, making their total amount set aside for PPI over £18 billion. Yet, the bank is still turning a profit.

RBS, on the other hand, has not made a profit in nine years. While not all of this failure can be attributed to the PPI scandal, it is a contributing factor to their continuing loss of profit. The banking group has paid out £4.3 billion as a result of PPI claims.

What about customer trust? In a study by YouGov, they found that only 36% of consumers trust the banks to work in their best interest. The mistrust that consumers have since the financial crisis is high in Europe. Scandals such as PPI are not doing anything to help their reputation.

Paul Lewis from the Financial Times says to be wary of the banks when trying to spot a financial scandal. Across the world, banks have paid billions for fines and penalties. Although nobody wants to keep their money locked in a cupboard under the stairs, we should be wary of entering into contracts with them.

As PPI claims and the misselling scandal comes to a close, will the banks learn their lesson? Time will tell if another scandal reveals itself. But, after the huge payout and scrutiny that the banks have come under for the past 10 years, we hope that they have learnt their lesson.