One of the reasons for the banking industry’s enthusiastic want of a PPI claims deadline is not only the possible £20bn they can save — speculated by lobby group Payback Time — but their capability to finally rebuild their capital according to the FCA’s terms. Discussions between the banking industry and the regulator may likely have circulated around new methods to motivate employees sell payment protection insurance according to usefulness and a further transparency on services and management.
PPI claims is the UK’s biggest financial scandal spanning a decade of insurance mis-selling that brought in a guaranteed £2bn to banks in profit per annum. Encouraging the FCA to go with its planned June 2019 deadline could help banks recover their capital in a shorter span of time. With the pound sterling weak, consumer goods in the UK are likely to inflate due to consumers holding back spending.
This means banks can see a shortfall of loans and mortgages — their primary source of income. PPI itself is still a product of bad association. Lloyds, backed by taxpayers since the Financial Crisis, may find itself in troubled waters due to the possible PPI deadline extension. The bank has already set aside £17bn to repay consumer PPI claims, the highest contributor in the collective £40bn scandal.