Financial News

  • 5 February 2014, 4:39

Banks In Secret Talks To Revive PPI Deadline

Some of Britain's biggest banks have revived secret talks with the City regulator about imposing a compensation claims deadline in the 20bn payment protection insurance (PPI) mis-selling scandal.

Sky News can reveal that several lenders, including Lloyds Banking Group and Barclays, have held tentative negotiations with watchdogs in recent weeks about establishing a 'time-bar' that would bring to an end the ongoing deluge of consumer complaints about PPI sales.

The banks have not committed themselves to further negotiations on the issue and the talks may end without any formal pursuit of a time-barring exercise, said a person involved in recent discussions.

Sources said that the issue was being pursued by individual banks and that while the British Bankers' Association (BBA) was aware of the situation, the talks were not being held under its umbrella.

"The talks are low-level at this stage, but they are taking place," said one.

Some banks, including the taxpayer-backed Royal Bank of Scotland (RBS), are said to oppose the idea of a formal time-barring exercise, which would involve a massive promotional campaign to increase public awareness of the PPI scandal.

News of the revived talks emerges just 24 hours after Lloyds Banking Group, the biggest seller of PPI policies, added a further 1.8bn to its compensation bill, taking its total alone to nearly 10bn.

Lloyds said on Monday that the current pace of claims meant that it anticipated receiving a further 550,000 claims from consumers.

In total, the big four banks have set aside almost 20bn, with RBS increasing its charge by 465m last week.

Martin Wheatley, the FCA chief executive, will appear before MPs on the Treasury Select Committee later on Tuesday, where he is likely to be asked about the mounting PPI toll and the discussions about a possible deadline.

The renewed talks come almost exactly a year after divisions opened between the big high street lenders during previous discussions on the issue.

At the time, the BBA said: "We are working with our members on a number of aspects of PPI complaints. The ongoing work focuses on three issues as a priority: addressing backlogs, making sure that customers can be confident that the offers they receive are right and highlighting that there is no need for them to engage a claims management company.

"Discussions with the FSA [now the FCA] to clarify the parameters of their complaints handling guidance are ongoing. We are unable to comment further at this stage."

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.

"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."

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

The FCA, BBA and individual banks declined to comment on the revived time-barring discussions.

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