Biggest banks earmark £10bn to cover mis-selling claims

Tim Wallace
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THE BIGGEST banks have now set aside more than £10bn to cover PPI mis-selling compensation payouts, and analysts believe the total for the industry has smashed the £12bn mark.

RBS today sets aside an additional £400m to cover the claims from aggrieved customers, taking its individual total to £1.725bn so far.

And analysts believe HSBC will set aside another £150m in its third quarter results on Monday.

It comes after Lloyds added another £1bn to its provisions yesterday, and Barclays set aside £700m extra earlier this month.

That will bring the total compensation provisions for the big four to £10.247bn so far, with other scandals potentially inflicting further costs on the banks.

“There is also the potential for further ‘banana skins’ down the road,” said analyst Nic Clarke from Charles Stanley.

“The PPI redress situation has turned out far worse than expected and it is possible that issues like customer redress relating to interest only mortgages could prove painful.”

Part of the banks’ PPI problem comes from claims management companies who have aggressively marketed their services, resulting in a far higher number of claims than expected.

Although the authorities, like the Financial Ombudsman Service, discourage consumers from using CMCs as they can claim for free themselves, the firms have alerted more victims of mis-selling to the potential payout.