Consumers who were mis-sold Payment Protection Insurance (PPI) on their credit cards may have been under-compensated by £1bn, according to a report by industry experts.
The report found that banks and credit card firms did not account for monthly charges caused by PPI and due to this credit card holders with Lloyds Banking Group, Barclays, MBNA and Capital One potentially owe thousands of pounds in additional compensation, BBC reported.
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The report estimates that the compensation amount should be higher where additional charges were levied to cardholders’ bill due to the premiums of mis-sold PPI policies.
As per the regulatory requirements, the bank and the card companies has repaid the cost of the PPI policy as well interest; although, they failed to include charges triggered by the controversial insurance, the publication reported.
The experts opined that it is difficult to assess how much additional compensation these financial firm could be owed and the responsibility to claim the difference lies with consumer.
Cliff D’Arcy, a former banker and PPI expert, was quoted by the BBC as saying that: "I’m confident that the figure will be somewhere in the region of £1bn of extra compensation.
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By GlobalData"It’s because banks were charging very high penalty fees, very high rates of interest on borrowing and some of these claims go back decades. So it just compounds and multiplies to a very big number," D’Arcy added.
The Financial Ombudsman Service, which oversees disputed compensation claims between customers and banks, said the additional charges should have been refunded.
According to an estimate, approximately 16 million PPI policies have been mis-sold since 2005 and compensation by banks averages about £3,000 per claimant, translating £22bn in total repayments.
