When the Financial Conduct Authority (FCA) announced that it was delaying its latest announcement regarding payment protection insurance (PPI), many media outlets reported that it was unlikely that the regulator would go ahead with its proposed date of June 30 2019 for imposing a PPI claims deadline, or time-bar. The media instead suggested that a date later in 2019 was now more likely.
However, the 2016 annual reports of two of the UK’s largest banking groups, both published in February 2017, suggest that the banking sector is still working on the basis that the deadline will be in June 2019.
The annual report of Lloyds Banking Group says:
“The Group’s current PPI provision reflects our interpretation of the Financial Conduct Authority’s (FCA) consultation paper regarding a potential time bar of the end of June 2019 and the Plevin case.”
(The Plevin case was a landmark court judgement which is expected to pave the way for a new wave of PPI claims from people alleging that they were not informed of the commission payment that the firm who sold the policy would receive.)
Lloyds made additional provision of £1 million for PPI compensation during 2016, taking its total PPI redress provision to £17 billion. The bank has indicated that it does not expect to need to increase its PPI provision further.
The annual report of Barclays Bank says:
“We are also working to put legacy conduct issues behind us and the FCA’s proposed deadline of the end of June 2019 for PPI complaints, although not yet confirmed, is a significant development.”
Barclays also made additional PPI provision of £1 billion during the year, taking its total to £8.4 billion. It says that £2 billion of this remains to be paid.
Royal Bank of Scotland made additional provision of £601 million for PPI during 2016. This takes its total PPI compensation reserve to £4.9 billion, and says in its annual report that £3.7 billion of this had been paid out by the end of 2016.
HSBC, the other one of the ‘big four’ UK banks, has set aside a total of £3.7 billion to settle PPI claims.
The total amount set aside by banks and other financial institutions to pay PPI compensation has topped £40 billion. Latest FCA figures show that £26 billion of this has already been paid out.
A definitive announcement from the FCA on a PPI claims deadline is still awaited. In the two years before any deadline is imposed, the big four banks and 14 other firms that sold the most PPI will need to fund a £42 million marketing campaign, designed to alert consumers to the deadline and to prompt them to consider making a claim if they have not already done so.
The Lloyds annual report also reveals that the Group made additional provision of £1.085 billion during 2016 for other conduct related issues: £280 million for packaged bank account compensation, £261 million in respect of arrears-related activities on secured and unsecured retail products, £94 million related to insurance products sold in Germany, and £450 million for other conduct risk provisions.
The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.