The UK’s biggest banks are bracing themselves for another £2bn on their PPI bill
Britain's largest banks are set to add billions to their collective bill for payment protection insurance (PPI) mis-selling in the next two weeks.
According to Sky News, executives at Lloyds Banking Group, Royal Bank of Scotland, HSBC and Barclays are in the process of finalising top-up provisions, amounting to around £2bn in total – due to be disclosed as part of their respective third quarter statements.
Sources close to the banks confirmed they will add to their existing PPI provisions ahead of formal confirmation from the Financial Conduct Authority (FCA) that a 2019 cut-off point will bring an end to Britain's costliest financial scandal.
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The four biggest high street lenders have already set aside a hefty £30bn for compensating victims of mis-selling and administering claims.
In August, the financial regulator said it was moving forward with proposals for a PPI complaints deadline – looking to draw a line under everything.
"Putting a deadline on PPI complaints will bring the issue to an orderly conclusion in a way that protects both consumers and market integrity," said FCA chief executive Andrew Bailey.
"We have listened to all the feedback we have received and believe that the steps we are taking are the right ones."
The banks had hoped to set aside adequate funds to cover PPI mis-selling, but with the FCA deadline for claims now likely to be a year later than originally anticipated, they may have to rethink this.
Lloyds has already been forced to shell out more than £16bn over the matter, as the lender with the biggest share of PPI policies.
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It will kick off the banks' third quarter results next week, with analysts predicting it will need to top up the amount, even as the government continues to offload its remaining shareholding in the bank.
The PPI scandal involved millions of people claiming compensation for PPI policies they were sold alongside mortgages, loads and credit cards. PPI is still the most complained about financial product, according to the Financial Ombudsman Service. In May the Ombudsman said it was still receiving up to 4,000 PPI cases each week and that half of all the cases it has received since 2001 have been related to PPI.
But monthly PPI compensation payouts have been steadily falling this year, according to the FCA. They dropped to £266.8m in May, from £405.8m in April and were down to £244.6m in July.