Money set aside by the major banks to compensate victims mis-sold payment protection insurance (PPI) will run out by December, according to Which?, the consumer group.
Britain's biggest banks have each set aside multi-billion funds to meet claims on PPI, which was commonly sold alongside credit cards and loans.
But Which? has calculated how long these compensation pots might last given the frantic speed at which complaints were being lodged last year.
Which? says that based on the pace of claims in the first half of 2012, the last published figures, that Barclays's PPI compensation fund would be exhausted by October.
“Some banks have been in denial about the true scale of the payment protection scandal," said Richard Lloyd, Which? executive director. "They must come clean about how many more PPI complaints they’re expecting, publish updates on the amounts that have been paid back, and claw back bonuses from executives who presided over this £13.6bn mis-selling fiasco.
“The banks should be proactively contacting their customers and making sure it is as easy as possible for those with a legitimate claim to get their money back, without any hassle.”
Bank Estimates of when compensation pots will run out Lloyds Banking Group (LSE: LLOY.L - news) (includes Halifax) March 2013 Barclays October 2013 RBS (LSE: RBS.L - news) -NatWest June 2013 HSBC (LSE: HSBA.L - news) December 2013 Source: Which?
More than 2.5 million people have already been paid compensation, totalling £8.05bn, for being mis-sold the insurance. PPI was meant to pay for people's loans and credit cards if they fell ill or lost their jobs. However, in many cases, people were not eligible to claim on the insurance. In some cases they have been repaid thousands of pounds. The average pay out is £2,750.
Which? says the it takes the total amount set aside by the banks to £13.6bn. Estimates have suggested that the total bill could come to £25bn.
The banks have lobbied the Financial Services Authority to set a deadline for claims to be made of April 2014. The industry has raised concerns about the high level of bogus claims being made with millions of consumers being contacted by claims management companies. These firms typically take 25 per cent of any compensation.
The FSA has said it will not set a cut-off point without a full public inquiry.
Consumers already face a lengthy delay if their bank or building society refuses to pay and they are forced to take their case to the Financial Ombudsman Service (FOS). It has emerged that some people are waiting for more than a year.
Monthly PPI over the past two years
- FSA guidance: How to claim back mis-sold PPI