Two of Britain’s biggest banks warned of billion-pound costs from a rush of claims for mis-sold payment protection insurance (PPI) today.
Barclays revealed after trading closed tonight that it was facing costs of up to £1.6bn following a bigger-than-expected stampede of complaints in the run-up to the 29 August deadline.
Read more: How did banks get their PPI sums so wrong?
Lloyds Banking Group also said that PPI costs could total as much as £1.8bn before the bell opened this morning, prompting the bank to suspend its share buyback plan.
Today’s shock announcements came a week after Royal Bank of Scotland (RBS) and CYBG warned that an unprecedented number of complaints could cost up to £900m and £450m respectively, with both groups blaming higher claims last month for a worse-than-expected blow.
The Co-Operative Bank revealed it had received “a substantially greater volume of inquiries and complaints than expected”, but said it needed more time to give full estimates.
The Financial Conduct Authority (FCA) has reported that roughly £36bn in compensation has been paid out so far, with the typical payout amounting to £2,000.
However, think tank New City Agenda has predicted the PPI bill could cost as much as £53bn.