The FCA could block consumers from making fresh claims over PPI from mid-2019, according to an e-mailed statement Tuesday.
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The FCA will listen to feedback on this and other proposed changes before its consultation closes on 11 October.
Britain’s biggest banks face another bill for PPI mis-selling of up to £1 billion after the regulator set a 2019 deadline for claims, a year later than expected.
London’s bank stocks fell sharply on Tuesday.
The FCA wants to draw a line under PPI claims, which have cost the financial services industry billions of pounds in claims from customers who were mis-sold policies.
A mid-2019 deadline would be “later than anticipated” and could trigger more legal costs at United Kingdom banks, Shore Capital analyst Gary Greenwood wrote in a note to clients Tuesday. “We wouldn’t be surprised to see top-ups of a few hundred million pounds (and perhaps as high as 1 billion pounds) for each of the large United Kingdom banks, with Lloyds being the worst affected”. Lloyds, which tops the list with £16 billion set aside, said it was disappointed by the extended deadline.
Lloyds’ results, published last week, showed Britain’s largest retail bank had set its provision for PPI on the basis that the time bar would be in spring 2018.
The news came on a morning when bank stocks across Europe were taking a pummeling as investors continued to weigh the possibility that regulators could soon require them to put more toward capital buffers. Andrew Bailey, Wheatley’s successor, took over last month but has been on the FCA’s board since 2013. So far banks have forked over GBP24.5 billion ($32.34 billion) to people who bought the insurance product, known as Payment Protection Insurance.
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The Financial Conduct Authority said this morning that the deadline would bring “an orderly conclusion” to the fallout from the scandal, which has so far cost companies nearly £40 billion in compensation, interest payments and administration. But many policies were ineffective, foisted on people who did not need them or were sold in an underhand manner.
