What’s going on with the PPI Claims Cases?

Lloyds’ shares dropped 8pc as investors got fright at the bigger than expected cost of ppi claims while Barclays and RBS dropped almost 3pc and HSBC just under 1pc. Analysts at Deutsche Bank mentioned they expected ppi claims to reach 8 billion pounds, nearly double the 4.2 billion pounds estimate originally given by the Financial Services Authority (FSA) for the total costs, though some bankers think the number may be higher and said compensation costs could rise to more than 10 billion pounds.

In their point of view, the charges taken against the ppi would have been taken after discussions with the FSA and have a negative read across to the other bank in the uk which may be now expected to take similar expenses.

It’s good news that Lloyds has recognized the ppi court ruling has left banks with nowhere to hide. This was mis-selling with an epic scale. Every bank involved should right now accept the consequences of their actions and give speedy redress to all affected clients.

Ppi claims towards Barclays and Royal Bank of Scotland, which had the biggest market shares in the ppi business right after Lloyds, could cost the banks 1.13 billion pounds and 1 billion pounds respectively, based on Deutsche Bank though some analyst say they might be forced to generate even bigger payouts of as much as 1.6 billion pounds.
Presenting his very first set of Lloyds results since taking over as chief executive from Eric Daniels in March, Antonio Horta-Osorio mentioned the ppi provision was sensible, prudent and the appropriate thing to do and would draw a line under the issue.

The ppi provision, combined with a 2.61 billion pounds impairment charge, mostly consisting of 1.1 billion write downs on the bank’s Irish business, pushed Lloyds to a first quarter pre tax loss of 3.47 billion pounds. This compares with the 721 million pounds profit Lloyds produced in the first three months of last year, which at the time was hailed as a sign of the bank’s recovery.

The British Bankers Association (BBA) last month lost a judicial review towards an attempt to overturn brand-new rules on the sale of ppi. The BBA has until Tuesday to launch an appeal against the verdict. However, Lloyds said it wouldn’t be backing the appeal. Several of the UK’s other major banks including HSBC are backing the BBA’s attempt to overturn the rules, that could cost them billions of pounds.

Andy Clarkblogs aboutPPI claims and other financial products for British based site www.PPI refundsUK.co.uk. He also covers unfair credit card charges and the financial claims niche generally, as well as writing pieces on personal finance, house sales, repossession and business finance.

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