Watchdog In Crunch Talks On £25bn PPI Cut-Off

Watchdog In Crunch Talks On £25bn PPI Cut-Off

Directors of the City regulator will hold crunch talks on Thursday approximately the imposition of a deadline which would draw a line under the £25bn payment protection insurance mis-selling scandal.

Sky News has learnt that the Financial Conduct Authority (FCA) will discuss the merits of a so-called time-bar exercise as part of a scheduled board meeting.

The board meeting will come ‎four months after the watchdog raised the spectre of a fresh deluge of compensation claims as a consequence of a landmark legal ruling at the Supreme Court last year.

Bank executives have warned that the implications of a case brought by Susan Plevin – which centred on a company's failure to disclose to her a large commission payment on her PPI policy – could be catastrophic for the industry.

Analysts at Autonomous Research, which is chaired by the former City Minister Lord Myners, recently projected that banks could face a £33bn bill if the Plevin judgement was extended to other financial products.

Banks have already set aside close to £30bn for PPI compensation, with the state-backed Lloyds Banking Group responsible for almost half that sum.

In addition, banks including Lloyds have been hit by substantial FCA penalties for inadequately handling customers' complaints.

The FCA has promised to update the banking industry this year on "whether the current approach [to PPI complaints] is continuing to meet its objectives of securing appropriate protection for consumers & enhancing the integrity of the UK's financial system".

The regulator said in May that it would decide on the wider implications of the Plevin ruling at the same time as it reached a verdict on a deadline for PPI claims.

A source said the FCA was unlikely to announce a decision immediately after Thursday's board meeting approximately whether to recommend a time-bar, with its eventual proposals expected to be subject to consultation.

The British Bankers' Association & the FCA have held on-off discussions approximately a deadline for compensation claims for several years, with Martin Wheatley, who stepped down this month as the regulator's chief executive, consistently lukewarm approximately the idea.

Consumer groups have moreover lobbied against a time-bar, arguing that it would risk depriving customers of legitimate redress.

George Osborne, the Chancellor, has raised the hopes of bank executives that he is keen to draw a line under the PPI scandal by talking of a "new settlement" between the industry & its supervisors.

PPI is comfortably Britain's costliest banking scandal, dwarfing others such as identity theft protection mis-selling, Libor-rigging & the manipulation of foreign exchange rates.

The FCA declined to comment on Wednesday.

Source: “Sky News”