However, industry sources say that even taking into account the billions they will have paid out in redress, the insurance was so “insanely profitable” that the banks will still come out ahead by the time next year’s August 29 deadline for filing compensation claims comes round.
According to data from the Financial Conduct Authority, so far £31.5billion has been repaid to the customers of banks, credit card companies, building societies and other firms that sold PPI. A source said firms are bracing themselves for a surge in claims before the deadline, which could see them paying compensation worth about 60 per cent of what they made on selling the policies.
On that basis, “PPI will still have been worth it for the banks”, he said.
Earlier this month, Barclays and Lloyds Banking Group increased their mis-selling provision by £400million and £550million respectively.
The top up took the amount set aside by Barclays to cover claims to £9.5billion, while Lloyds, which accounted for half of the PPI market, has a £19.2billion pot to cover redress payments. lMarketInvoice, the online invoice financing firm, is looking to strike deals with other major high-street banks after signing a partnership with Barclays.
Founder and chief executive Anil Stocker said that the tie-up with Barclays, which will see the bank take a minority stake in the financial technology business, will enable it to serve more small to medium-sized enterprises.
“Right now all banks are looking at their digital future, their customer base, their product set. This [the Barclays deal] will be the first of many,” he said.
Stocker added that he wants to expand MarketInvoice’s offering to include vehicle and trade finance.