6,000 hired to handle PPI complaints

Lloyds, RBS, Barclays and HSBC face huge staff costs and admit £5bn needed to compensate PPI customers The big high-street banks are preparing to hire up to 6,000 workers to tackle complaints from millions of customers wrongly sold payment protection insurance. The banks are believed to be seeking temporary offices to house the army of staff needed to contact customers who may be in line for a payout after the banks abandoned their legal action against a decision by the Financial Services Authority to demand they compensate customers mis-sold PPI. Contingency plans are now being dusted down by the banks, which have disclosed that they face bills of more than £5bn to compensate their customers andcover the adminstration costs involved. None of the banks – Lloyds Banking Group, Royal Bank of Scotland, Barclays and HSBC – was prepared to disclose their staffing requirements as a result of the PPI climbdown. However, industry sources said that they expected up to 6,000 staff to be needed. Bailed-out Lloyds, which started the capitulation by the banks last week by announcing a £3.2bn provision, has linked up with outsourcing company Huntswood to bring in 500 extra staff. Industry sources believe its headcount is likely to swell – at least temporarily – by 1,000 or more while it works through all the complaints it faces as the largest player in the market. A Lloyds spokesman said: “We are already using third parties and internal resources to deal with PPI complaints. We are keen to move quickly to bring about resolution for our customers”. It is estimated to have a share of around 40% of PPI, which was intended to keep up loan repayments in the event of illness or redundancy. In reality the insurance rarely paid out and many customers bought it without being aware they had. The PPI payout industry that is expected to be created comes at a time when banks have been making employees redundant to trim costs. Lloyds alone has cut more than 26,000 roles as it integrates HBOS, which it rescued in the banking crisis, into its operations. One banker said that staff facing redundancy might now be offered redeployment to work on complaints handling, while others reckoned that outsourcing firms such as Huntswood and Capita would be asked to help provide temporary staff as quickly as possible to contact customers and to work on the dedicated hotlines that are being established. The industry went through a similar process during the endowment mis-selling scandal when staff were housed in temporary backup sites around the UK to process the paperwork. Complaints handlers – unlike many banking roles – do not need to be directly regulated by the Financial Services Authority but fall under the compliance finance functions of banks, which are regulated directly. One banker said there was substantial concern about call centres having enough capacity to deal with the inquiries that will be sparked by the recent publicity, even before banks start their efforts to contact customers. Lloyds is particularly affected as its takeover of HBOS means it also owns Halifax, which was also active in PPI. Even before the latest move by the industry to facilitate large-scale compensation payments, Lloyds had already begun a mass mailshot of more than 230,000 Halifax credit card customers. The project Kestrel programme began in January to target customers who were sold policies in 2008 and 2009. Banks are refusing to say how long they expect to take to handle all the PPI complaints, some of which have been in limbo while the now abandoned legal action was underway. Observers believe it will take at least until the end of the year to scrutinise all the claims. While Lloyds has said its provision for PPI will be £3.2bn, Barclays has disclosed a figure of £1bn, RBS £1bn – if compensation paid and past provisions are included – and HSBC £280m. City minister Mark Hoban blamed the regulatory regime created by Labour – rather than the banks – for the PPI debacle. Hoban said: “One aspect of the reforms that we are introducing by setting up the financial conduct authority is to give the regulator more powers to intervene earlier to prevent that sort of scandal happening again.” Payment protection insurance Banking Lloyds Banking Group Royal Bank of Scotland Barclays HSBC Insurance Insurance industry Financial Services Authority (FSA) Jill Treanor guardian.co.uk

Posted by on May 10, 2011. Filed under News, Politics, World News. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.