HSBC has joined Lloyds Banking Group (LBG) in setting aside another £½ billion to pay out future successful PPI claims with less than a month to go to the claims deadline.
In their 2019 Interim Report, Europe’s biggest bank has set aside $615 million (£505.7 million) for the first six months of the year.
The bank had previously set aside $555 million (£456.4 million) of which $327 million (£268.9 million) had already been paid out.
It was forced to re-evaluate its position because of a massive increase in the number of claims with customers rushing to beat the August 29th deadline.
In common with most of the UK’s high street banks, HSBC had found that the amount it had set aside expecting it to be enough to see them through to the deadline was an under-estimate.
The report said: “The provision has been updated to reflect the incremental increase in complaints which this is expected to generate …. an increased level of information requests and complaint experience together with increased levels of forecast information requests and therefore complaints for the remaining period to 29 August 2019.”
Hundreds of thousands
The bank estimates it has sold 5.4 million policies since 2000, but, as of June 30th, it had only contacted or dealt with 54% of its customers, leaving it expecting claims from hundreds of thousands more before the deadline.
The report acknowledges 1,891,000 complaints so far, with an expected 359,000 before the end of August.
The average uphold rate is expected to be 83% with an average payout per claim of £2,091.
The bank is also expecting 964,000 information requests from customers who want to know if PPI was ever attached to one of their credit agreements.
RBS expects another
In its own half year report Royal Bank Of Scotland (RBS) said it had already dealt with 2,968,000 PPI claims and expected to break the 3 million barrier with another 95,000 before the deadline.
It estimates it will up hold 9-0% of the new complaints (slightly up from the 88% to date) at an average payout per claim of £1,559.
The bank has set aside £5.3 billion to pay compensation and believes the £400 million it had left in the pot on June 30th will be enough to see it through to the deadline.