Banks' Fury At Trade Body Over PPI Advice

Some of Britain's biggest banks have expressed fury at their own trade body over the City watchdog's announcement on Friday of a looming deadline that will bring the industry's biggest mis-selling scandal to an end.

Sky News has learned that the British Bankers' Association (BBA) informed its members on Thursday evening that there was little prospect of an imminent decision from the Financial Conduct Authority (FCA) about whether such a cut-off point would be established.

The note, sent by a senior BBA executive, informed Britain's biggest banks that the regulator was unlikely to reach a decision until its board met again towards the end of October.

Little more than 12 hours later, the FCA announced that a deadline for consumers to claim compensation for payment protection insurance (PPI) mis-selling could be introduced in the spring of 2018.

Such a time-bar exercise would bring the curtain down on the scandal, with more than £26bn already having been set aside by the industry to settle claims.

The FCA's statement caught the big high street lenders by surprise because of the BBA's earlier guidance, according to a number of bank executives.

A source at one leading bank said there was deep dissatisfaction with the trade association over the issue.

"It (Other OTC: ITGL - news) 's amateur hour stuff," said an executive at another institution.

The criticism has arisen at a sensitive time for the BBA, which is one of the UK's biggest industry lobbying groups and which recently relinquished its controversial role in supervising the scandal-hit Libor benchmark interest rates.

The chairmen of the biggest UK banks have commissioned a review of the industry's trade associations, which is being led by Ed Richards, the former head of Ofcom, the media regulator.

Mr Richards is expected to recommend the creation of a new umbrella body into which some of the smaller banking associations would be subsumed, and the BBA chief executive Anthony Browne is likely to be a frontrunner to lead the enlarged entity.

Sky News reported last week that the FCA board was meeting to discuss the PPI issue, which also included a discussion about the implications of a landmark legal ruling at the Supreme Court last year.

Bank executives had warned that the implications of a case brought by Susan Plevin - which centred on a company's failure to disclose to her a large commission payment on her PPI policy - could be catastrophic for the industry.

Analysts at Autonomous Research, which is chaired by the former City Minister Lord Myners, recently projected that banks could face a £33bn bill if the Plevin judgement was extended to other financial products.

In the FCA's statement on Friday, it said that the prospective 2018 deadline for PPI complaints would also apply to those associated with the Plevin ruling.

The UK banks saw their shares rise after the announcement, with investors relieved at the prospect of an end to the long-running scandal.

However, some industry executives were irritated that the cut-off point was still at least two-and-a-half years away, with claims management companies and a bank-funded advertising campaign likely to trigger a fresh deluge of claims.

The BBA and the FCA have held on-off discussions about a deadline for compensation claims for several years, with Martin Wheatley, who stepped down last month as the regulator's chief executive, consistently lukewarm about the idea.

Consumer groups have also lobbied against a time-bar, arguing that it would risk depriving customers of legitimate redress.

The BBA declined to comment on the note it had circulated to members (Other OTC: UBGXF - news) .