PPI Claims are a Nightmare to the Bank Shareholders

If you have been into service and taken a loan for buying a car or booking for a flat, you will know that PPI loans are a big hit today. With the rising graph of people, increasingly opting for the PPI loans, the ease of customers has increased and given them an opportunity to settle their loans and be regular with the payment despite of the hardships involved with the maintaining of the loan repayments schedules. With the increase of the PPI schedules, there is an increase in the PPI claims which the Banks are struggling to repay. This non-repayment of the PPI claims by the banks has become an inherent reason for the bank shareholder’s worries.

Payment protection insurance is a scandal that has become a prime financial gossip of the country. With banks failing and giving back the loans, the increase in the number of pending claims having risen by almost 100% which has been a cause of worry amongst the shareholders of the largest banks of the country.Image result for PPI Claims are a Nightmare to the Bank Shareholders

The Regulation that Brought a Slight Change

After the Financial services Authority imposed harsh financial rules and fines over the banks which failed to repay the loans and had created dedicated departments in charge of the regulation of the PPI claims, the banks had started settling out the claims to good proportions. The introduction of the regulation saw a rise in the repayment of the amounts and faster disbursements. Although the uprising was proving satisfactory to the customers and the shareholders, it failed to be successful and the banks started rejecting the claims repeatedly with an attempt to mitigate their loss.

The Liability Problems with the Bank

The crisis has hit the market as much as the PPI claims have been on a rise since then and is causing serious liability problems to the largest of banks of the country. With a significant portion of liability dedicated towards pending PPI claims, the Prudential Regulation Authority has raised an obligation for the banks to settle their Balance Sheet positions and bring liabilities to the minimal.

The debts have crossed over 27 billion Euros which is crossing the original estimation of the banks and is seriously a cause of the shareholder’s nightmares. As the shareholders will face significant losses and may have to bear the loss of the banks in the long run, the profitability of the banks remains a mystery. The banks will face a sharp hit if the final payments of the PPI claims are demanded and the banks are made to repay them with strict guidelines.

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Mark Farley explains how payment protection insurance is a scandal in spite of the attempts made in the form of various laws. The PPI claims have been on a rise now which the banks are failing big time to keep pace with.