Banks To Hold Crunch Talks On PPI Deadline
Britain's banks will on Thursday hold crunch talks about a campaign to secure a deadline aimed at bringing the curtain down on one of the industry's worst ever mis-selling scandals.
I understand that executives from the major high street lenders have scheduled talks for tomorrow about whether to press ahead with a "time-barring exercise" that would bring an eventual end to millions of compensation claims for mis-selling payment protection insurance (PPI) policies.
The discussions, which are being co-ordinated by the British Bankers' Association - the industry lobbying group - will be held against a backdrop of opposition from leading consumer affairs groups.
Sky News revealed last month that a number of the big banks had serious misgivings about the initiative, which would involve a huge advertising campaign to raise awareness of PPI mis-selling being launched sometime next year. A deadline for claims several months later would be designed to provide certainty about the final bill for the banking industry, which has reached more than £15bn and is set to rise further.
Key to the decision about whether to press ahead with the campaign will be the stance of Lloyds Banking Group, which had by far the biggest share of PPI policy sales, and which has so far set aside £6.7bn for compensation claims.
Industry sources said that Lloyds executives were sceptical about the merits of the initiative unless it had the backing of consumer groups. HSBC's support is also said to be wavering, although Barclays is understood to be enthusiastic about the idea.
"If the big banks don't all sign up to it, it's dead in the water as an idea," a senior banker said on Wednesday.
Individual banks' stance appears to be dictated at least in part by the volume of policies which they sold before 2005. PPI products were introduced in the 1980s and banks have argued that their record-keeping does not include details of all customers who were sold policies.
People close to the situation insisted that tomorrow's talks might not result in a decision about whether to press ahead with the time-barring exercise, and that further discussions were possible before such a decision was reached.
The Financial Services Authority has said that it is open to discussing the idea with the industry but is understood to have concerns about the operational capacity of banks to handle a sudden spike in claims prompted by a massive consumer awareness campaign.
The regulator said in a recent statement:"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 major high street banks all topped up their provisions for PPI mis-selling in their annual results, with the bill for the big four alone standing at more than £14bn.
It emerged this week that the Financial Ombudsman Service had received a surge in complaints about PPI complaints in the second half of 2012.
The BBA declined to comment.