The Government is being urged to bring in new laws to ensure banks who mis-sold payment protection insurance (PPI) are forced to compensate thousands of customers, after warnings the sums owed by financial institutions could amount to €500m.
A company which manages claims has made the estimate based on British comparisons, and the thousands of people in Ireland who have been denied redress because their policies were taken out before 2008.
Stanton Fisher — which is British-based, with offices in Dublin — is also calling for a public inquiry or judicial review into the issue, which, it says, is potentially “the biggest financial scandal in Irish history”.
Its managing director, Brady Collins, said the PPI problem is as bad, if not worse, than in Britain, but Irish consumers were not being refunded as much as their British counterparts.
He said his firm had been fighting on behalf of Irish customers “with considerable difficulty” for the past two years, blaming in part “the failure of the banks to accept bona fide cases”.
PPI provides cover for loan repayments and was, in many cases, mis-sold by lenders who tagged it onto loans being sold to people not eligible to claim the insurance, some of whom were retired.
An independent study ordered by the Central Bank into Irish banks’ PPI selling activities said that banks should refund €67m. However, Mr Collins suggests that figure was merely “a drop in the ocean” and that €500m would be closer to the mark, and still “a conservative estimate”.
Fianna Fáil said the so-called “six-year rule” needs to be “urgently addressed” so that those who took out policies before then could get refunds.
Its finance spokesman, Michael McGrath, has published a Bill which will be debated in the Dáil in the autumn that would change this “crude” statute of limitations law.
He said at least 1,000 customers had their complaints rejected by the financial ombudsman last year because the policies pre-dated 2008. Based on the estimates of those who have been denied redress and the Central Bank’s own figures, he estimates that the total that should be owed by financial institutions to customers is “well north of €200m,” and this is “a national scandal”.
The Central Bank defended the review as “a straightforward mechanism for consumers who were sold PPI after the Consumer Protection Code came into full effect” in July of 2007. A spokesperson said: “Any consumer who has concerns about the sale of his/her PPI policy can address those concerns as a complaint to the credit institution that sold the policy.”
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