PPI victims 'should have got £5bn more'

Twelve million consumers who were mis-sold Payment Protection Insurance (PPI) should have got an extra £5bn, a group of MPs has said.

That is the total amount that claims management companies charged clients to process their complaints.

MPs on the Public Accounts Committee (PAC) said they were disappointed the money did not go to the victims of the scandal.

Their report said this amounted to "a failure of regulation and redress".

Consumers can complain directly to the Ombudsman free of charge - yet so far, 80% of those who have done so, have chosen to go through claims management companies, which take up to a third of any money paid out.

Since April 2011, more than £22bn has been paid out in compensation to those who were sold the insurance policies by banks, but did not necessarily need them.

Compensation

Members of the PAC were critical of the role of the regulator, the Financial Conduct Authority (FCA), and the Treasury.

It said they, and others, were too slow in taking responsibility for the situation and "too passive in allowing it to happen".

The committee said it was also concerned about future potential mis-selling - for example, with people who have accessed money from their pension savings.

The Treasury said it would respond to the report formally in due course.

In the meantime, a Treasury spokesperson said: "The government's position is clear. The mis-selling of financial products is wrong and the victims of mis-selling must receive the compensations due to them."

For its part, the FCA said it was considering the recommendations in the PAC's report and welcomed its point that "central to preventing mis-selling is firms having the right culture".

"We remain focused on culture and will continue to encourage and cajole the industry as it delivers cultural change," an FCA spokesman said.

"Firms' culture and governance is one of the priority areas set out in our business plan. However, it is right that firms themselves take the responsibility for setting, shaping and maintaining their own culture, one with the interests of consumers at its heart."

The FCA is still considering whether to impose a deadline for all PPI complaints.