PPI payouts 'spent on new cars'

PPI payouts 'spent on new cars'

The payment protection insurance (PPI) mis-selling scandal has led to a bit of payback for some - but they are more likely to have spent their compensation on holidays or a new car rather than put it into savings, research suggests.

Almost a quarter of people who had a PPI windfall put the cash towards a holiday, according to the website VoucherCodesPro.co.uk.

Claimants said they had received £2,810 on average - and many said they had taken two-and-a-half weeks before they'd blown the lot. One in five said they had used their payout to buy a new car, while just under this amount (19%) said they had bought an appliance for their home.

Around one in seven said they put the money into savings, with 17% using it to pay off debts or other household bills. Ten per cent splashed out on new clothes, while 5% bought new shoes.

The financial ombudsman gets around 6,000 new PPI complaints each week, making the scandal by far the biggest the watchdog has ever seen. PPI covers a borrower's loan repayments if their earnings are stopped, but the insurance was often added onto loan or credit card deals without people realising. Some people were given a "hard sell", or found that such policies were unsuitable for their needs.

The Financial Conduct Authority found that a total of £13.3 billion has been paid out in PPI compensation in the past three years.

Copyright Press Association 2014