New proposals could cause banks to pocket up to £23bn in unpaid PPI compensation, a group said
Banks stand to pocket up to £23bn in unpaid payment protection insurance (PPI) compensation when new deadlines come in, a new campaign group has warned.
The group Payback Time was launched today to warn how new proposals to be announced in early 2017 are expected to limit what companies can do to expose the PPI scandal.
Under the new plans, the government and regulators intend to encourage banks to spend £42m on publicising the costliest financial scandal ever to hit the UK's banks, which is just a small portion of the £23bn the banks hold in PPI redress funds.
Claims management companies on the other hand have invested £200m publicising the PPI scandal. Currently 80 per cent of successful claims are being made through these companies.
Banks have had difficulties estimating the total cost of their misconduct. Payback Time said Lloyds Bank had increased its provision for PPI 10 times between 2011 and the third quarter of 2014.
There are also new plans to set a deadline after which consumers will no longer be able to claim back money.
In August, the Financial Conduct Authority announced it was setting a deadline for complaints of June 2019, not spring of 2018 as had previously been proposed.
The combined proposals could result in billions of pounds added to banks' balance sheets, the group said.
A survey by YouGov commissioned to mark the launch of the Payback Time campaign found almost half of those surveyed thought the government was not doing enough to improve the way banks treat consumers, and 57 per cent of people felt the banks need to do more to let people know there is still around two thirds of the PPI redress unpaid and waiting to be claimed.
Simon Evans, spokesperson for Payback Time and chief executive of the Alliance of Claims Companies, said the government and regulators are "planning a New Year cash windfall for bankers" by placing these limits on consumers.