Car Sales Boosted by PPI Claims?
Car sales across the UK have defied forecasts of a slump and increased as the UK economy re-enters recession. In Scotland new car registrations soared by 24% in July compared with the same period last year. In other parts of the UK new registrations were up by 7% and overall throughout the country by 8%.
So what is happening? Well the answer may lie in a recently published article in the Financial Times that reported the money being reclaimed by consumers in PPI insurance was doing more to stimulate the UK Economy than government initiates.
The UK Office of Budgetary Responsibility is predicting that 2012 will be a bumper year for bank customers with banks expected to pay out over £6 billion on top of the £9 billion that’s already been paid. In total some experts are predicting the eventual figure could exceed £10 billion.
Simon Kirby a senior research fellow at the National Institute for Economic and Social Research has said that a worst case scenario could see banks pay out £15 billion, which could increase the UK economy by 0.7%.
Senior economists are now saying those claiming are choosing to spend the money on home improvements, new cars and holidays, rather than investing it for a rainy day and the effect is being seen with improved sales in areas where you would expect sales to be currently falling.
One claimant, retired nurse Elaine Overton said “when I heard I was going to get over £2,000 in compensation I hired builders to fix a long overdue problem with the eaves in my roof and put the rest of the money towards a holiday in Greece in September”.
Millions of bank customers have been making claims on payment protection insurance that they took out with credit cards, loans and mortgages. Many of these policies it has been held were mis-sold to customers, with many not being told they were inappropriate for them, whilst others were misinformed it was mandatory if they wanted to get credit.
However, where initially claims were only paid to those who could show they had been mis-sold the insurance either because they already had pre-existing cover or medical conditions that would exempt them from claiming, many banks are now taking a no-quibble policy of paying out largely due to the fact that so many customers were never advised the policies were optional.
Despite, this however, many customers are still being told no policy was sold to them even when it was and it’s not until the matter is taken up with the Financial Ombudsman Service that the claim is accepted and paid out. For this reason many bank customers, unfamiliar with the UK’s financial system, are now choosing to employ the services of claims management firms to help. This has attracted many rogue companies that are set up to exploit customers, with many taking over 35% of all that is paid out and charging upfront fees before taking on cases.
Peter Dean, Managing Director of YourDebtExpert, experts in PPI recovery has stated “there is a need for reputable companies to assist consumers who don’t have the time to make their own claims, or who wish to take advantage of our expertise, but it is vital they are treated fairly and charged reasonably”.
“We have reclaimed over £1.2 million for our clients in the last 18 months and are currently dealing with over 10,000 claims on behalf of 5,000 customers”.
Not surprising that people would choose the just spend that insurance money rather than invest it. When you get a decent sized sum like that you get all excited and it’s only natural to want to use it right away instead of investing it and only seeing the results in your portfolio total.