BRITAIN’S banks bowed to the inevitable and dropped their appeal against the FSA on the mis-selling of payment protection insurance (PPI) yesterday, as Barclays and RBS became the latest lenders to reveal multi-million pound bills from the debacle.
Barclays said it is putting aside £1bn and RBS £850m to pay compensation to customers who were mis-sold PPI, an insurance that protects borrowers who lose their jobs. Their estimates are in between Lloyds’ provision of £3.2bn and HSBC’s of £270m.
But the banks tried to save face by insisting that despite dropping the appeal, they will pursue a series of behind-the-scenes talks with the FSA on the issue of “retrospective justice”.
The British Bankers’ Association (BBA) had argued on behalf of the industry that the FSA was wrong to tell banks to apply guidance issued in 2010 to their handling of complaints about PPI sales made before that date.
The BBA vowed to continue to make the argument outside of court: “We continue to believe that there are matters of important principle which we will be taking forward in other ways with the authorities.”
But the industry’s complaints are likely to fall on deaf ears. A spokesman for the FSA told City A.M.: “The whole issue of retrospective regulation was what was discussed in court, so that issue should be finished.” The FSA will be discussing the issue further with banks, however – to make sure they comply with the new rules.
RBS, HSBC and Barclays were forced into a corner after Lloyds chief executive António Horta-Osório unilaterally withdraw from the appeal last week.
THEN AND NOW: WHAT BANKS SAID ON PPI
"The BBA and its members are carefully reviewing the judgment of 20 April and considering whether to...appeal.” British Bankers Association statement
“The legal analysis has not changed ...The courts won’t pay any attention to whether Lloyds has caved or not caved.” Stephen Hester, RBS
“In the interest of providing certainty for their customers, the banks and the BBA have decided that they do not intend to appeal.” BBA statement
"RBS supports this position... RBS will record an additional provision of £850m in the second quarter of 2011.” Royal Bank of Scotland statement