CYBG sets aside another £350 million for PPI

CYBG – the former Clydesdale and Yorkshire Bank – says it has just set aside another £350 million to handle tens of thousands of unexpected PPI claims.

The banking group revealed the increase after claims surged by 59,000 in the six months to March 31st.  It also said it expected another 110,000 before the PPI claims deadline on August 29th next year.

Elevated

In a statement it said the ‘elevated level’ of complaints had been driven by increased activity from claims management companies and ‘heightened media coverage.’

The media coverage includes the £42 million consumer awareness campaign ordered by the Financial Conduct Authority (FCA) as a condition of the imposition of the claims deadline.

Warning

The second TV advertising campaign, featuring the animatronic head of Terminator star Arnie Schwarzenegger, has just started with a warning to consumers that they must make any potential PPI claim before the cut-off date or lose the chance to do so forever.

The FCA have said the campaign is starting to have the desired effect with thousands of new complaints being made across the board.

Statement

The CYBG statement added: “The group now expects the current level of complaints to remain at an elevated level for a period of time, followed by a reduction in volumes and costs as we approach the time bar in August 2019.”

The bank itself will only have to provide £202 million of the new provision with the remaining £148 million provided by its former owner National Australia Bank under an agreement made when the two de-merged in February 2016.

Speculating

Commentators and analysts are now speculating that CYBG will be just the first to announce further increases in PPI provision within the next few weeks.

Nicholas Megaw of the Financial Times said: “The warning raises the prospect of further provisions from CYBG’s larger peers as they report first-quarter results next week. A senior figure at Lloyds Banking Group told the FT that it was “more likely than not” to set aside further money before the 2019 deadline, though the additional amounts are expected to be small compared to the almost £19bn it has paid so far.”

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