Banks facing further hit as PPI deadline extended
Banks are facing a further hefty hit from the payment protection insurance scandal after the City watchdog extended its proposed deadline for claims by more than a year.
Consumers will have until June 2019 to claim compensation for mis-sold payment protection insurance (PPI) under plans outlined by the Financial Conduct Authority (FCA).
It had originally proposed a spring 2018 cut-off for claims.
Shares in banking groups slumped into the red as the new deadline is set to escalate the total bill for the PPI scandal, which has already been the costliest yet for the financial services industry, at well over £30bn.
One banking expert warned the extended deadline could see each bank have to set aside hundreds of millions of pounds more to cover claims.
Lloyds Banking Group - by far the worst affected by the PPI scandal - said it was "disappointed" the deadline will not come into effect until June 2019.
But it stressed its rate of complaints were falling rapidly and said it would not increase money set aside for PPI "at this stage", with £2bn of unused provisions.
Shares in Ulster Bank owner, Royal Bank of Scotland, and Barclays dropped 3%, while Lloyds fell 2%.
The FCA confirmed plans to launch a marketing campaign from next June, which will be funded by Britain's banks, to raise awareness of the 2019 deadline for claims to be submitted.
It admitted the deadline is later than first expected and later than a number of banks wanted.
But it said it gives time to prepare the marketing campaign and get plans in place for the deadline.
FCA chief executive Andrew Bailey said that he hopes the cut-off will draw a line under the scandal.