Financial News

  • 14 February 2014, 7:36

Banks Abort PPI Deadline Talks After FCA Snub

Britain's biggest banks have abandoned talks for a second time that were aimed at fixing a cut-off for claims in the 20bn payment protection insurance (PPI) mis-selling scandal.

Sky News understands that the major high street lenders have walked away from renewed discussions with the Financial Conduct Authority (FCA) after the City watchdog signalled that it was lukewarm about such an agreement.

A source close to Lloyds Banking Group, which has set aside almost 10bn to cover the cost of PPI mis-selling, said on Thursday that there were now no ongoing talks about a time-barring exercise.

The development means that banks will almost certainly face historic PPI-related claims lasting for several more years.

Lloyds said last week that the current pace of claims meant that it anticipated receiving a further 550,000 claims from customers.

In total, the big four banks have set aside almost 20bn, with Royal Bank of Scotland recently increasing its charge by 465m.

Martin Wheatley, the FCA chief executive, told MPs last week that the banking industry had not yet presented a compelling case for imposing a deadline after Sky News revealed that discussions were back underway.

And John Griffith-Jones, the FCA chairman, added: "If you can quickly ensure everyone gets their money and gets it quickly, it would be churlish for us to say no. But that is a high hurdle."

The aborted talks came almost exactly a year after divisions opened between the big high street lenders during previous discussions on a PPI deadline.

In January last year, the City regulator said it had agreed to talks with the industry about a time limit, but would insist that the banks funded a huge advertising campaign to ensure sufficient awareness of the PPI issue.

The hostility of consumer groups to a deadline appeared to kill any prospect of a deal, and it is unlikely that they would now have been any more enthusiastic about a deal, analysts suggested.

News of the abandoned talks came as Lloyds reported a full-year statutory profit for the first time since 2010, and confirmed that it would pay bonuses

The FCA, British Bankers' Association - which was not directly involved in the latest talks - and individual banks declined to comment.

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