Insiders have speculated that the reasoning behind the UK’s major banks desire for the Financial Conduct Authority to establish a deadline for ppi claims, is because of two reasons; namely the fact that by creating a set-in-stone ppi claims deadline for June 2019, the Banks could save upwards of £20 billion, plus the bigger fact that the banks would also be able to adhere to FCA rules and would be able to re-construct their capital reserves.
PPI has proved to be the biggest and most costliest financial scandal ever to hit the UK’s financial sector. A sector that for many years was held up around the world as an example to others and one where it’s apparent transparency and innovation was proudly lauded.
PPI is said to have added up to £2billion annually to the banks coffers.
The UK’s major banks are hoping that by getting the FCA to announce a 2019 deadline and with a weak pound and inflation set to soar in the coming years, due to various factors, including the United Kingdom’s exit from the European Union – it would mean the banks would be able to accrue and save billions of pounds which would result in the banks being able to successfully stockpile billions in capital reserves.
One bank that may struggle even with a 2019 deadline, may be Lloyds. The bank has as of January 2019 readied an estimated £17 billion in provisions for paying out people who were mis-sold PPI by the bank. The figure is by some distance the biggest amount of money set aside by a UK bank to compensate individuals affected by mis-sold PPI and any deadline, which would see fresh ppi claims, arriving at the Banks’ Iconic London Headquarters could spell serious difficulties for the Lloyds down the line.