The poor old punters are likely to foot the bill following the FSA's court win over mis-sold payment protection deals
The share prices of the big banks were not greatly affected by the industry's defeat in the huge payment protection insurance (PPI) case. But appearances can be deceptive. For its part, Lloyds confessed the ruling could have a "material" impact on its financial position.
The problems do not stop there. The trickier question in the boardrooms of the banks will be how to manage the fall-out from the court ruling. Do they volunteer to pay compensation in most cases quickly? That would be the honourable course, since the sale of PPI policies seems to have developed into a very profitable ? and disgraceful ? racket. Or do they go to appeal and risk making matters worse?
An appeal seems to be the banks' preferred route. But the final chapter promises to be very messy if a �4bn bill for the industry is the outcome. Customers already suspect that they will end up paying for reforms to make the banking system safer. Didn't RBS chairman Philip Hampton admit as much on Tuesday when he said "it seems inevitable that customers and shareholders will be impacted by additional costs" from the Vickers commission recommendations?
Will the poor punters be expected to pay again for the PPI scandal in form of more costs? Yes ? and next year's bonus row will carry fresh intensity.
Source: http://www.guardian.co.uk/business/2011/apr/20/viewpoint-payment-protection-insurance-banks
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