Britain’s high street banks will announce next week that they are setting aside an additional £1bn in provisions to compensate customers who were mis-sold payment protection insurance (PPI).
The new provisions are being driven by an acceleration in the number of claims which relate to PPI policies sold BEFORE 2005, and have prompted urgent talks among bank executives about the conduct of claims management companies (CMCs).
Insiders said that the new top-ups could reach close to £1.5bn between the biggest banks.
To date, the PPI scandal has seen Lloyds allocate £9.8bn; Barclays £3.95bn; RBS £3.1bn; and HSBC’s £2.1bn for compensation claims.
The sizeable new top-ups could revive calls for a so-called time-barring exercise, which would involve imposing a cut-off point for consumers to submit compensation claims.
The scale of the new bill will surprise many in the City, particularly after the Financial Ombudsman Service (FOS) said on Monday that new complaints fell by more than 50% during the last three months, prompting it to say that the worst of the scandal had passed.
The FOS said it had received fewer than 57,000 PPI-related complaints in the second quarter of the year, compared with just over 132,000 in the same period last year.
The latest wave of claims is understood to be particularly concerning to banks because many date back to before 2005, which was the reference point for an unsuccessful judicial review brought by the major banks three years ago.
Consumer Protection Services Ltd is Regulated by the Claims Management Regulator in respect of regulated claims management activities; its registration is recorded on the website www.claimsregulation.gov.uk