Banks might be forced to pay out more in compensation to those that have been victims of the biggest financial scandal in UK banking history as the watchdog delayed making a decision.
The FCA said back in August that it was considering a mid-2019 cut-off for PPI claims and would deliberate and make a decision before the end of 2016. The proposed deadline was more than a year later than the industry had been bracing itself for, increasing the chances of more claims being made.
The FCA said it had received a large volume of correspondence to its proposal and that it would decide on the deadline in the first quarter of 2017. The delay means the final deadline for claims is likely to be further along than the initial mid-2019 deadline.
The bill for the PPI scandal topped £40bn in October when Barclays increased its provisions to £8.4bn in response to the FCA’s previous announcement. Lloyds, by far the biggest seller of PPI, increased their provisions by £1bn totalling more than £17bn.
The FCA delayed its decision when it emerged Santander failed to provide its customers with information about PPI that were required under governing rules.
Banks sold highly profitable PPI alongside mortgages, loans and credit cards from the late 1990s. PPI was meant to repay borrowings if a customer became ill or unemployed but policies were often structured to limit payouts, imposed on customers as a condition of a loan or sold to people who would not qualify for a claim.