PPI bill for UK banks could hit £5 billion

An analysis group has claimed that the UK’s major banks could be facing a bill of around £5 billion in relation to PPI claims from customers that believe that they were mis-sold this cover. US investment bank officials from Morgan Stanley claims that this could be the bill that UK banks are facing over the next five years, with the estimates cost of dealing with these claims continuing to increase.

Barclay’s Banks, Lloyds TSB, and HSBC are amongst those that may be footing some of this huge compensation bill. The prediction comes after American banking giant, the Bank of America, had to set aside $592 million to deal with forecast claims over Payment Protection Insurance. Officials believe that the cost to UK banks will be even higher.

Morgan Stanley has said that at the very least, as a base case scenario, the bill for UK banks is likely to be just over £2.6 billion. However, this is based on only a quarter of PPI policyholders making a claim, and also on fewer than half of these claims being upheld. Should the claims and approvals be higher than this the cost of dealing with claims could be considerably higher.

The average payout to each successful applicant is likely to be around £2000. PPI came under fire after investigations showed that over the years banks and financial institutions had been involved in mis-selling the cover, and this has resulted in many people finding themselves eligible to make a claim for compensation.

The Financial Services Authority has been trying to clamp down on PPI sales, and has brought in new proposals. However, these are being appealed by the British Bankers’ Association, which claims that the financial regulator is trying to apply new rules and standards to old sales.

 

Tags: PPI sales, mortgage, Business Finance, bank, Barclay's Banks, protection, Primary dealers, uk banks

£100 incentive from Abbey and A&L

With the competition amongst the leading UK banks and building societies for increased custom some have been offering consumers incentives to entice them to switch their bank accounts, and this is something that Abbey and Alliance & Leicester have now decided to do. Read more

Tags: alliance & leicester, rate, Current account, Leicester account, alliance & leicester bank account, bank accounts, bank, uk banks

HSBC reveals extent of charge costs

HSBC reveals extent of charge costs

In another twist to the ongoing dispute between consumer groups and British banks over allegedly “unfair” charges such as overdraft fines, a leading high street bank has revealed for the first time the financial damage it has sustained over the issue.

The figures, released yesterday by HSBC, show that more than £100 million has been paid back, reflecting the scale of customer rebellion against the charges.

HSBC chief executive Michael Geoghegan said that “the size of the refunds that we have made demonstrate our commitment to treating our customers in a fair and transparent manner.”

Last week, the Office of Fair Trading (OFT) officially launched legal action against eight UK banks.

Mr Geoghegan also welcomed this news, which he said would “achieve legal clarity and a resolution for our customers and our business”.

The banks were granted a temporary reprieve as the Financial Services Authority (FSA) agreed to waive all charges until the conclusion of the case, which will come later in the year.

HSBC has recently announced an 11 per cent rise in profits so far in 2007 compared with the same period in the year before, totalling around £7 billion.

Tags: costsIn, Financial Services Authority, uk banks, fair, consumer groups, uk banks.mr geoghegan, scale, overdraft