Additional Funds Set Aside for PPI RedressAug 28, 2017
£5bn set aside for additional PPI claims.
As Britain’s biggest banks are releasing their annual results, Sky News reports that billions of pounds in additional funds have been set aside to cover an anticipated rise in claims for mis-sold Payment Protection Insurance (PPI) as the City regulator, the Financial Conduct Authority (FCA), seeks to introduce a two-year deadline for new claims.
Barclays, HSBC and Lloyds Banking Group, are believed to have increased their PPI pots by a further £5bn, taking the total cost of the PPI mis-selling scandal to well over £30bn, the most expensive in banking history.
Both Santander and Royal Bank of Scotland yesterday announced huge increases in provisions to compensate their customers with both financial institutions adding a further £450m and £500m respectively to cover the costs of mis-sold PPI.
With around half of all policies sold, the UK’s biggest high street bank, Lloyds Banking Group has indicated it could set aside another £2.5bn. If this is the case, it alone could see a bill in excess of £16bn.
The exact figures are still being finalised by banking officials and their auditors, but this round of provisions are believed to be amongst the biggest so far and are in response to news of a huge publicity campaign funded by the financial institutions over the coming months.
Figures provided by the FCA show that between January 2011 and November 2015, over £22.2bn has been paid out to customers who were mis-sold PPI on credit agreements instigated prior to 2009. This total indicates that banks are anticipating further pay-outs of at least another £8bn.
Added to this, banks could face further embarrassment and a separate bill of around £33bn following a case brought by Susan Plevin which centres on a company’s failure to mention that her otherwise suitable PPI policy included a 70% agents commission fee. Plevin’s case was successful and she was awarded financial redress.
Banks, are understandably keen to ‘draw a line’ under PPI mis-selling claims and are eagerly awaiting the results of a consultation over a time bar, meaning it will be almost impossible to begin a new claim for mis-sold PPI after Spring 2018. This deadline they propose would also apply to those cases associated with the Plevin ruling.
The FCA have been lobbied by banks to reduce the two-year deadline to just 12 months, although it’s believed this could prove a step too far for the regulatory body as consumer groups continue to battle against the time-bar arguing it could deprive legitimate customers of compensation.