The cost of Payment Protection Insurance (PPI) for the whole banking sector is estimated to reach £26 billion.
The Daily Express reported that:
“The big five high-street banks mentioned above (Santander, HSBC, Lloyds, RBS, and Barclays) are understood to have allocated more than £24 billion* to compensate victims of insurance mis-selling last year.”
The total bill, for the whole banking sector, is expected to hit £26 billion after all the banks have revealed their end of year reports. However, banks which sold PPI are still in profit even though they have set aside the money for mis-sold PPI compensation.
Mike Trippitt, a banks analyst for Numis, said:
“This represents a substantial claw back, but we are not at the point where the provisions the banks make will overtake how much money they made. PPI was a substantial source of profitability for the banks.”
Among all the banks, Lloyds has the largest bill and its PPI provision is expected to grow by £500 million to approximately £12 billion including Administration costs. The PPI bills for other banks – Barclays, HSBC and RBS, are collectively expected to rise by £500 million. Interestingly, 24 firms have paid out £17.7 billion for mis-sold PPI (according to the Financial Conduct Authority). At the beginning of February 2015, the FCA announced they were going to examine the mis-sold PPI compensation claims process and may enforce a deadline for new PPI complaints.
If you are interested in finding out more information regarding PPI, please contact us today.
*Please note this figure includes Administration costs.
Express: Banks to pay £26bn for mis-sold PPI: 08.02.2015
New Model Adviser: Santander sets aside another £20m for PPI redress: 02.02.2015
Sky News: Santander UK To Take £20m PPI Top-Up Charge: 02.02.2015
The Scotsman Scotland Sunday: Lloyds dividend tipped for return: Sunday 22nd February 2015