Home Business NewsFinance News Big banks prepare for extra £1bn PPI hit

Big banks prepare for extra £1bn PPI hit

by LLB Editor
24th Jul 12 4:23 pm

Britain’s biggest banks are bracing themselves for a further £1bn hit for mis-selling payment protection insurance, taking the total bill to almost £8bn.

Additional charges for the period between April and June will be displayed in the half-year results of Barclays, HSBC, Lloyds Banking Group and Royal Bank of Scotland.

Lloyds is expected to say it has set aside more than its PPI provision for the first quarter of £375m when it reports on Thursday, while HSBC will say it has put more than its £300m provision for the first three months aside, according to Sky News.

RBS is thought to be on the verge of confirming it is making a further allocation similar to the £125m charge from the first quarter when it reports on August 3. Only Barclays is believed to be planning a smaller sum than its original £300m when it makes an announcement on Friday.

The figures will demonstrate how serious the mis-selling scandal has been for the British banking industry, while there have been calls for the financial sector’s culture and business practices to be overhauled after the rate-rigging scandal was revealed.

Some of the country’s top lenders have been accused over mis-selling complex interest rate hedging policies, known as swaps. A number of banks have agreed to pay compensation.

Anthony Sultan, chairman of the financial services group at the Claims Standards Council, believes it is right that banks pay consumers back what they are entitled to.

Sultan said: “We have always felt that the banks have not put sufficient reserves aside to cover the large amount of claims that will be made and are being made in respect to mis-sold PPI products.

“There has been a systematic mis-selling of the products as confirmed by the FSA in its own investigations. All we ask for is that those who have been mis-sold to receive the redress they are entitled to.”

Britain’s banks have endured a turbulent few years, with Barclays recently being fined £290m by UK and US regulators after employees manipulated the Libor.

Barclays boss Bob Diamond quit over the affair and a debate took place in Westminster over banking efforts in the aftermath, followed by several closely-watched hearings in front of the Treasury Select Committee.

More like this:

First PPI now mis-selling to SMEs – banks face FSA investigation

Payback! FSA orders banks to compensate small businesses over IRSA

Lloyds puts additional £375m aside to cover PPI claims

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