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PPI claims on banks could hit £10bn

The banks involved in the mis-selling of payment protection insurance could face as much as £10bn in claims, according to some City analysts.

According to the Telegraph, it says that some bankers think the number could be far higher than the £4.2bn originally estimated by the FSA and could be closer to the £10bn mark.

Analysts at Deutsche Bank have warned that they expected industry claims to total around £8bn.

The news comes after Lloyds set aside £3.2bn to cover PPI claims. Deutsche Bank says that Barclays and Royal Bank of Scotland – which have the biggest market shares in PPI after Lloyds – may be set to pay £1.1bn and £1bn respectively. Some analysts believe the pair may face claims as high as £1.6bn.

“In our view, the charges taken against the PPI issue would have been taken after discussions with the FSA and have a negative read-across to the other UK bank, which may be now expected to take similar charges,” said Nomura analysts in a note to clients.

The British Bankers’ Association lost a judicial review against an attempt new rules on the sale of PPI last month. The BBA has until May 10 to lodge an appeal against the decision. Lloyds Banking Group yesterday announced it has decided to withdraw from the judicial review.

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Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. John Hutton-Attenborough 6th May 2011 at 10:03 am

    This is absolutely scandalous and must be publicised in the widest public press possible so that the general public can really understand what they have been put through and how is responsible.

    Individual accountability at the highest levels in the banks should also be part of the process. If they can continue to pick up the £x million bonuses across the board then they can also face the music on what can only be described as appalling lack of customer care.

    Where does TCF fit in here? The FSA endorse it, the banks “say” they embrace it and yet clearly in relation to this matter it is clearly not the case.

  2. Julian Stevens 6th May 2011 at 1:56 pm

    It’s taken long enough for the FSA finally to get round to giving the banks a pasting but what a whopper this one looks like being.

    If those in charge at the banks see this as the first round of a new regulatory onslaught against their entrenched hard-sell practices, we may well see more of them either closing their retail FS arms or seeking regulatory authorisation outside the UK, as Barclays appear to have done already.

    The world is certainly changing, though one has to ask whether or not the way in which it’s happening is really the best for everyone concerned. Though the banks are, of course, the IFA sector’s deadliest rivals, regular compliance visits from the FSA, such as those to which the IFA networks are regularly subjected, would surely produce a better outcome for consumers. Instead, what we are seeing now, after years of failure to do its job properly, is the FSA effectively detonating a nuclear bomb over the heads of the banks. whilst this could be good news for the IFA sector, is it really the best methodology?

  3. Julian,

    As we have seen in so many posts on this subject the issue must now be to punish “names” rather than companies as has happened in the IFA community for so long. Why should “big bankers” continue to walk around with £x+ million bonuses and then not be caught as responsible for their businesses when such issues as this, and Barclays Banks recent problem happen. If the actual CEO is personally fined/ hauled over the coals then perhaps they would actually start to take some personal responsibility over the practices which go on in their businesses, and think of the client first before their back pockets. IMHOOC!

  4. Julian Stevens 6th May 2011 at 5:59 pm

    Yes, I agree. The FSA has been all to ready to nail IFA’s to a cross but when it comes to the banks (and indeed to the FSA itself) the failings are always “corporate” or “collective” or “institutional” or “managerial” or some other such but of waffle to deflect the finger of blame being pointed at any individuals. Mind you, in the case of the FSA, that’s possibly a good thing (just now), what with the contract terms for all the senior people awarding them massive golden parachutes (at our expense) for loss of office (including being booted out for being bloody useless), regardless of how catastrophically they may have failed to discharge their responsibilities.

    It’s the same old problem again ~ lack of accountability.

  5. Couldn’t agree more!

    If an IFA, Mortgage Broker or Insurance Broker did the the PPI thing (to a much smaller number of policyholders), it would be company fine, personal fine, loss of permissions and a personal ban.

    Whilst I can accept that, for example, telling Lloyds that it can’t do home insurance any more would have a significant effect on the whole market, that has to be open to the FSA.

    At the moment the banks can take a commercial view of, “We get fined, but the profit more than pays for it and we face no personal sanctions.”

    The FSA isn’t treating the customer (i.e. the public) fairly in allowing this practice to continue.

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