BANKS expect their litigation costs to rise another 30 per cent in the coming year, after already spending an extra 60 per cent in the last 12 months, according to research from Legal Business.
The study found 84 per cent of respondents have had to increase legal budgets since the financial crisis, and the level is not expected to fall any time soon – in part because of growing political pressure to punish lenders.
Mis-selling costs and regulatory investigations are expected to be the main drivers of the rise in costs, the report said.
Although the pace of new payment protection insurance compensation claims has begun to slow down for some banks – Barclays recently closed a claims processing centre in Glasgow – the biggest lenders have still set aside billions of pounds to cover expected future claims.
And a range of small and mid-sized firms are currently fighting cases over interest rate swap mis-selling in the hope of winning more money back from the lenders.
The study also noted that the increased co-ordination between regulators in different countries will push up the cost to banks.
Scandals including the Libor-fixing case have drawn in regulators from the UK, Europe, US and Japan, for instance.