You’ve been awarded compensation…but now pay it back

Posted by Ben Ryland in Banking on 14 October 2016 - Ben is a Senior Credit Analyst at checkmyfile.

Just when you thought it was over…it could be coming back with a vengeance.

Yes we’re talking about everyone’s favourite topic – PPI. The latest in this seemingly never-ending saga is that now the Banks may have miscalculated the PPI payments made to customers and are attempting to claw any overpayments back.

The PPI scandal, which has paid out nearly £25bn in mis-sold PPI payments, is now taking an unexpected turn as some of those who successfully claimed back PPI are now being contacted by the Banks demanding they hand back up to £15,000 from as far back as 4 years ago. At this stage it is unclear how many customers could receive these demands for repayment.

Almost 12m customers have claimed payouts as a result of the PPI scandal, but on closer inspection the Banks are discovering that errors were made in the amount of compensation paid out to some customers when the PPI review was conducted. If more and more cases are reviewed and the compensation packages are deemed to have been mis-calculated a larger investigation will be launched by the Banks concerned and even more customers could be contacted demanding a repayment is made.

Stories are appearing where customers have had PPI payments taken back from their accounts, where the Financial Ombudsman has had to become involved to resolve complaints the customers have raised against the banks.

Of course this tactic of clawing back these incorrect payments is not endearing the whole banking system to the public. Customers already furious with the PPI scandal may now find that they are having to repay all or part of the compensation which in many cases has already been spent.

Marc Gander of The Consumer Action Group says, “This is a scandal. The banks should not be coming after people years after the event. If the bank has made an error and someone has spent the money in good faith, then they should be protected by the law.”

The difficulty for most customers is the understandable lack of knowledge on how much compensation would be due for a PPI claim. The founder of think tank Mick McAteer highlighted this fact saying, “'It's virtually impossible for individual savers to work out the PPI redress they are due, so it seems unfair to expect someone who has spent this money to pay it back.”

So the PPI merry-go-round looks set to continue spinning as customers wait to hear if they have received the wrong payout and are expected to pay the banks back after more and more of these ‘errors’ come to light.

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