A £150 million increase in its PPI compensation provision has pushed high street banking group CYBG into a £145 million loss on the year.
The former Clydesdale-Yorkshire Bank boosted its PPI provision despite having added £350 million in May, following a re-assessment of the amount of money required to pay future successful claims up to the PPI deadline on August 29th 2019.
Might not be enough
The bank said in May the increase might not be enough because of the increased level of claims being received following the Financial Conduct Authority’s (FCA) deadline consumer awareness campaign.
The latest financial report says that the group has received 483,000 mis-selling complaints up to the end of September and, though complaint volumes are falling slightly, they expect to receive another 83,000 before the deadline kicks in.
However there remains a concern that even the newly added £150 million might not cover all the claims received.
The report admitted: “There is a risk that existing provisions for PPI customer redress may not cover all potential costs. In light of this, the eventual costs of PPI redress and complaint handling may therefore differ materially from that estimated and further provision could be required.”
To date CYBG has set aside a total of £2.64 billion for PPI claims, of which just £275 million remained in September – a figure now boosted to £425 million.
The group is not alone in feeling it has to increase its PPI provision because of the rise in the number of claims.
Over the year Barclays have added £400 million, Lloyds Banking Group (LBG) added £1.15 billion, catalogue and online sales company Shop Direct added £100 million and RBS set aside £175 million.
The total amount already paid out for successful PPI claims since January 2011 is £32.9 million.
In January 2011 just £36.1 million was paid in redress – a figure which shot up to a massive £735.3 million in May 2012 after the British Bankers’ Association (BBA) lost a judicial review on how claims should be investigated and the floodgates opened.
More than six years later the total payout figure continues to rise at more then £⅓ billion a month with thousands of new claims being made weekly.