In further news that is sure to depress bank shareholders, some of the UK’s leading banks are rumoured to have added billions of more pounds to their PPI claims provisions.
The news of the additional £2 billion which has been set aside to pay out victims of PPI mis-selling is expected to be announced within the next fortnight and will be revealed as part of the banks’ third-quarter statements.
The banks are Barclays, HSBC, Lloyds Banking Group and Royal Bank of Scotland. These banks have already set-aside £30 billion for PPI compensation, with Lloyds rumoured to be responsible for the lions-share of the payouts – with an estimate of it owning £16 billion to consumers who were mis-sold payment protection insurance.
This news comes on despite PPI claims refund requests slowing down throughout 2015 and 2016. However, the banks have decided to top-up their PPI provisions in anticipation of a 2019 deadline for PPI claims which is expected to be announced by the Financial Conduct Authority (FCA) soon.
Data released by the FCA has shown PPI compensation amounts stalling. In April nearly £405 million was paid out in compensation, but by the next month, that amount had slumped to £266 million. And in July the amount dropped even more to £244 million.
Financial experts have also been sounding the alarm about the possible repercussions of the Susan Plevin case, where Mrs Plevin went to court over the huge commission of 72% that she had to pay out to her lender and broker and the fact that she was informed of this prior to her taking out her PPI policy. It is estimated that a further £33 billion might need to be paid out by the banks if the Plevin case is extended to other financial products.