John McFarlane, the chairman of Barclays, has claimed that the PPI scandal has already turned “portions of Britain” into fraudsters.
McFarlane said that it was “inconceivable” that all the claims of the payment protection insurance mis-selling that had helped in fueling a “flat-screen television” buying spree were considered to be genuine.
In an interview with the Mail on Sunday, McFarlane said that he also accused the government of being complicit in the weakening of the banks by favoring a compensation culture.
He added: “The percentage of fraudulent claims is enormous.”
“It is almost inconceivable to think that £50bn was mis-sold.
He continued: “We have turned portions of Britain into fraudsters.”
Various insurance companies and banks have it hard to pay out more than £30 billion in order to compensate customers the mis-sold PPI since 2011.
The total number is anticipated to increase ahead of the deadline for claims that is scheduled for August next year and could reach £50 billion.
Barclays has already set aside an additional £700 million in order to meet compensation claims for mis-sold payment protection insurance. The said amount is understood to be open to review.
McFarlane stated: “It was in the government’s interests [for claimants to receive compensation]: consumer spending rose and it weakened the banks, so the government is complicit here in the decline of the City.”
He continued: “This is stimulation of the economy by buying flat-screen televisions.”
Payment protection insurance is introduced to cover mortgages, credit card repayments, and loans, in the event of sickness, an accident, or in some cases unemployment.
The scandal started when Citizens Advice introduced a “super complaint.”
The Financial Services Authority then started imposing some fines for PPI mis-selling in 2006. Also, the Office for Fair Trading waded in the following year. It referred the issue to the Competition Commission.
A court ruling in 2011 ordered the banks to contact their customers while offering compensation.
In 2017, the FCA started a £42 million ad campaign that featured Arnold Schwarzenegger in order to encourage new claims because the August 2019 deadline.