Slaughter Disc

New PPI compensation claims are expected to increase twofold over the next 12 months state the FSCS (Financial Services Compensation Scheme). Payment protection Insurance claims have originated from the mis selling of payment protection insurance over the past few years.

PPI insurance offered to cover your loan payments in the event that you either become unemployed, ill or have an accident, however many of the schemes fail to payout immediately on these occurrences, and have been mis sold as a result.

This has resulted in multiple claims for compensation from irate customers that amounted to 20 million pounds last year, and is predicted to rise to 40 million next year.

THE FSCS is the government body responsible for making payouts to customers whose firms are no longer trading, and it is unclear whether it sees the increase in claims as due to a general increase in claims, or an increase in the amount of financial firms ceasing to trade.

Loretta Minghella, Chief Executive of the FSCS, said: “The FSCS will continue playing a valuable role in promoting consumer confidence in 2010/11 by paying compensation when firms fail.

“PPI claims will be an important driver of our business next year and will contribute to significant costs estimated at £50.5m”

“Although the situation is fluid, our current assumption is that around 8,000 PPI claims will come in during the next year. That’s almost double the number we expect this year.

She continues in a vein which shows her main priority is to protect the consumer and not the industry.”In such tough economic times, we recognise that the interim and annual levies will be unwelcome news for firms. We take great care in determining our indicative levies though our primary obligation is to deliver compensation to those entitled to our protection,”