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Archive for tag: PPI Mis-selling Saga

The PPI Mis-selling Saga is NOT Over Yet!

February 2016 - the news for the Lloyds Banking Group was not looking great. Just when people thought the PPI mis-selling saga and compensation era could be coming to an end, up it rears again - and this time is could be Lloyds that are the receiving end of yet another financial hit.

PPI hits profitability

All banks and lenders made huge profits from the sale of payment protection insurance (PPI) policies but now that their customers are entitled to their money - and are claiming back millions - the profits of banks and lenders are being severely hit.

Analysts are predicting that Lloyds Banking Group will need to find another £2 billion to repay the claims by customers for PPI compensation.

The biggest banking group in the UK, Lloyds has clawed back some profitability, paying modest dividends to shareholders in 2015.

The other banks are not in such great shape, desperate to hold on to their customers and profits, but still pay out compensation claims as they arrive.

At the start of 2016, Royal Bank of Scotland revealed it would be setting aside another £500 million pounds to cover PPI compensation claims and costs, along with an additional £2 billion in other legal bills. This will result in a loss for the bank in the coming year.

Santander who at one point said it thought it had compensated all of its customers who were affected by the mis-selling of PPI, announced that they were adding an additional £450 million to their PPI fund.

Expected surge in claims

Banks and lenders are, however, bracing themselves for another surge in PPI compensation claims as the country awaits the decision of the Financial Conduct Authority (FCA) on the possibility of a PPI deadline being imposed.

Although the favoured deadline is June 2019, it may present significant challenges to banks should there be an upswing in PPI claims. The FCA announced that along with the announcement of a PPI deadline, there will be a £42 million advertising campaign to raise consumer awareness.

Analysts and forecasts

Financial experts and analysts will forecast how well or poor a bank is expected to perform in the coming months. It is imperative that a bank performs well, managing its assets and business in such a way that it produces a profit, and not a loss. If a bank becomes unviable, it rocks the economy of a country for months, sometimes years to come.

Banks generally have a mildly optimistic forecast or a neutral one from analysts, who are being cautious regarding the potential for an upsurge in PPI compensation claims.

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