Insight: Banks come to terms with Britain's compensation industry
By Matt Scuffham
MANCHESTER, England (Reuters) - The boss of Britain's biggest retail bank struck a chord with the public when he complained of getting unsolicited calls from claims management firms promising him compensation from his own and other banks.
But while people share his irritation with calls and text messages about fantastic sums from claims they have not made, more and more are turning to claims management firms to help return billions tricked or bullied from them by the banks.
Facing a huge backlog of claims from the biggest mis-selling scandal in British banking history, the country's lenders are beginning to turn to claims firms for help themselves, instead of treating them as enemies.
It is a far cry from last year, when Lloyds' (LLOY.L: Quote) Chief Executive Antonio Horta-Osorio summed up the mood of many bankers by accusing the firms of fueling bogus claims, pointing to the irony of their calls to his own phone.
Horta-Osorio said one in four cases from firms claiming compensation for unwanted or unsuitable payment protection insurance (PPI) -- meant to protect borrowers who lost jobs or became ill -- did not even have a PPI with Lloyds.
"We have to stop this," he said. "It's fraud."
The tables were turned by figures from the country's Financial Ombudsman Service showing that Lloyds lost 98 percent of cases referred to the service in the year to March 2012, the worst record of any bank, compared with just 18 percent at Britain's biggest building society, Nationwide.
Now claims firms report a more cooperative atmosphere as the banks, which face a bill likely to far exceed the 12 billion pounds ($19 billion) they have already set aside, seek to save costs and restore their battered reputations. Continued...