Barclays, Lloyds have allocated billions of pounds to compensate wronged customers in PPI mis-selling scandal

Around 20,000 jobs have been created by big banks in the UK to deal with the servicing of Payment Protection Insurance (PPI) claims and interest rate hedging, according to employment group Manpower. Compensation claims that have been haunting the biggest banks across the UK have resulted in the massive recruitment drive. The figure excludes the posts created by the various Claims Management Companies which aid customers seeking compensation.

Mark Cahill, UK Managing Director, ManpowerGroup is hopeful of the employment drive to continue till beyond summer. Although around 600,000 new jobs were created in the last year alone, the UK employment phenomenon is far from coming to an end. The UK banks, specifically Barclays and Lloyds, have managed to conjure the most expensive financial scandal in British banking history, with the Financial Services Authority revealing that the UK banks have paid nearly £9bn in the past two years to compensate customers who were mis-sold PPI.

Earlier, the Financial Ombudsman Service (FOS) said that during the last six months of 2012 new complaints rose by 110%, reaching a record total of 283,251. The FOS website even stated that the PPI complaints scaled new heights in the second half of the year with almost three-fourths of the total complaints registered under PPI claims. To deal with the exorbitant number of complaints, banks have resorted to recruitment. Lloyds has announced that it has employed 6,000 people for faster processing of PPI claims.

In mid-January, Financial Services Authority and the banking industry were mulling over implementing a deadline for PPI mis-selling claims in order to recede the backlog in disputes and billions of pounds in payouts. “Despite attempts to put a lid on the amount that the banks pay out on PPI, within the last month alone, we have seen big names like Barclays and Lloyds massively raise the amount of money set aside to deal with PPI claims. A whopping £11bn pounds has already been allocated, and some commentators think that number could easily double. The consequence of this will not only mean cash in people’s pockets, it will also translate into jobs”, said Mark Cahill.