Banks Face New £1bn PPI Mis-Selling Bill
Britain's biggest banks are poised to add hundreds of millions of pounds more to their collective bill for mis-selling Payment Protection Insurance (PPI) in the coming weeks even as they accelerate efforts to persuade the regulator to impose a deadline on claims.
I understand from senior bank executives that the major lenders could add more than £1bn in aggregate to the industry's tab for PPI when they report full-year results during the next six weeks.
The figures are still being finalised and so represent preliminary estimates only. But if borne out, the figure would take the bill for the four largest UK banks (Barclays, HSBC, Lloyds Banking Group and Royal Bank of Scotland) to beyond £11bn, further cementing its status as one of the biggest British mis-selling scandals ever.
Bankers say that the latest wave of compensation is being used in talks with the Financial Services Authority (FSA) as evidence that a deadline for claims is essential if banks are to continue rebuilding capital levels while growing lending to the real economy.
Sky News disclosed last November that talks between the banks and the FSA were taking place in order to establish a time limit. The FSA confirmed last week that it was considering imposing a deadline on claims.
In a statement on Friday, the regulator said: "The Financial Services Authority (FSA) has been approached by the British Bankers' Association (BBA) to discuss the potential for introducing a time limit for Payment Protection Insurance (PPI) complaints - if the banking industry funded a sufficiently widespread advertising campaign to ensure consumers are aware of the PPI issue and how to complain.
"Our key priority is to ensure consumers are protected, so the FSA Board would need to be convinced that any proposals would be in the interests of consumers. We have had initial discussions and are prepared to consider the merits of this and other options.
"A key consideration will be the potential to get compensation to more consumers, more quickly.
"We will continue to hold discussions with the BBA as well as actively seeking the opinions of consumer groups and other stakeholders.
"However, no changes to existing FSA, or future Financial Conduct Authority (FCA), rules would take place without a full public consultation."
Consumer groups expressed anger at the FSA's decision to consider the banks' lobbying efforts. Even if the industry gets its way, analysts now believe the total cost of PPI mis-selling is likely to exceed £15bn.