Lloyds to lead industry off PPI claim deadline

Tim Wallace
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BANKS are likely to drop industry-wide proposals for a deadline on PPI compensation claims to draw a line under the crisis, with Lloyds taking the lead, it emerged yesterday.

The biggest lenders have already set aside more than £12bn to pay back customers who were mis-sold the payment protection insurance, with the number rising every quarter as more claims than expected were lodged.

Analysts expect Lloyds to set aside anywhere up to an additional £1.4bn in its fourth quarter results today, on top of the £5.285bn already provided for. RBS yesterday put aside another £450m to cover the payouts, while last month Barclays increased its provisions by an additional £300m.

Some banks had considered placing a deadline on claims to end the spiralling of costs and end the crisis.

But it is thought that the mood in the industry has moved against the idea, partly because it risks bad publicity of banks trying to avoid compensating customers they mistreated and partly because the flow of claims may at last be showing signs of easing, making ending the process less worthwhile.

The banks are also facing another mis-selling scandal after the Financial Services Authority ruled unsophisticated small firms had been wrongly sold complex interest rate swap products.

The biggest banks are expected to pay out around £2bn to the firms affected.