PreviousNext

'Draw a line' under PPI claims so that banks can lend again, says CBI chief

By // Money | 'Draw a line' under PPI claims so that banks can lend again, says CBI chief
Email to a friend Plain text Print version // Font size: Decrease font Enlarge font

By Ed Monk

PUBLISHED: 09:01 EST, 12 November 2012 | UPDATED: 09:05 EST, 12 November 2012

The CBI has called for government to 'draw a line' under PPI compensation payments to ease the financial burden on banks.

The business lobbying group also warned that allowing compensation claims for the sale of products based on Libor - the manipulation of which several banks stand accused - would be 'a dangerous precedent'.

CBI director general John Cridland spelled out his concerns in a letter to The Times today. He questioned whether compensation for payment protection insurance (PPI) mis-selling should be paid out where there was 'no real evidence of mis-selling', and suggested that the government put a time limit on claims.

Man of letters: CBI director general said in a letter to the Times that it was time to lay off the banks for PPI mis-selling.

Man of letters: CBI director general said in a letter to the Times that it was time to lay off the banks for PPI mis-selling.

Mr Cridland said 'it is right that consumers are able to get swift and proper redress', but added 'I can’t help thinking that the time has come for it to be put to work more productively through lending into the economy'.

'Banks are hamstrung enough, rebuilding their capital buffers to inject much-needed stability in the banking sector, without this continued millstone around their necks', he said.

The FSA should now rule that most people are aware of PPI mis-selling and set a time limit for claims, Mr Cridland said.

Banks have already set aside more than £12billion to meet the cost of repaying premiums from PPI. All the major lenders increased their provisions last week and the bill is likely to rise even further.

Many claims have been paid with no questions asked because banks need to clear backlogs and do not have sufficient sales records to win cases when they are referred to the Financial Ombudsman Service (FOS), which decides on disputes between individuals and companies.

The volume of claims has been rising as more people are made aware they could have a claim, in particular by claims management companies that conduct claims in exchange for a fee - typically 20 per cent or more of any sum recovered. 

Banks have complained that aggressive advertising by these firms has led to many unfounded claims being lodged, sometimes by people that who do not even have a policy.

The FOS said that it upholds more than eight in every ten PPI claims against banks. Banks must pay the FOS £850 for each PPI claim that is investigated, but a FOS spokesman said that no fee was payable in 'frivalous or vexacious' cases - including where the claimant did not own a policy.

The CBI also warned against the rise of class action against banks over products that were reliant on Libor - the interbank lending rate that several banks are now accused of manipulating.

He referred to Guardian Care Home which is suing Barclays for selling it complex interest-rate swap arrangements that it claims were not appropriate. Guardian Care Homes is seeking additional compensation on the basis that the products were linked to Libor, which Barclays was fined for manipulating.

John Cridland said: 'Am I alone in my concern about the recent High Court ruling on the Guardian Care Homes case?

'Banks must be held accountable for manipulation of Libor and the Wheatley Review has set out a comprehensive and compelling case for reform. But hindsight is a wonderful thing. It would be a dangerous precedent if banks were to be held responsible for products sold that related to Libor. 

Tagged : No tags for this article

Headlines Newsview all

Ebola could hit 15 countries across Africa: Study of how disease has spread in past finds 70million people may be at risk of infection

The Ebola outbreak could hit 15 countries across Africa - putting the lives of 70 million people at risk, a groundbreaking study has found. In a ...

economic ties with China as two countries announce £2.4bn in new commercial deals

Britain is to forge closer economic ties with China after Chancellor George Osborne announced £2.4billion in new commercial deals with the People’s Republic. As the annual ...

Manchester Dogs Home: Public raise over £200,000 in hours after dogs home fire

Donations have poured in for Manchester Dogs’ Home after a fire ripped through the premises, killing more than 53 dogs last night. A JustGiving page set ...

Manchester Dogs' Home: 15-year-old questioned on suspicion of arson attack after blaze kills 40 dogs

A 15-year-old boy is being questioned on suspicion of arson after a blaze at Manchester Dogs' Home which killed more than 40 dogs. Firefighters were called ...

Oscar Pistorius braced for verdict in Reeva Steenkamp murder trial

The judge in the Oscar Pistorius murder trial has started delivering her long-awaited verdict in a case that has gripped the world - a decision ...

Airline passenger was accidentally given suitcase full of plastic EXPLOSIVES left at Sydney airport by the AFP a month ago... then took them home 

A woman got more than what she bargained for when she was given a replacement suitcase at Sydney airport after her luggage was damaged on ...

I'm convinced Oscar Pistorius is innocent, says journalist to have spent time with the time athlete during his murder trial

Mark Williams-Thomas believes athlete shot Reeva Steenkamp by mistake Reporter says he has spoken to Paralympian and his family in 'real detail' He says double-amputee is a ...

Royal baby hoax hospital staff wanted to discipline nurse Jacintha Saldanha

An Australian DJ has made a face-to-face apology to the family of a nurse who killed herself after she put her through to the Duchess of ... Full story

Trainee teacher hangs himself after split from the girlfriend he couldn’t live without

A trainee teacher hanged himself on New Year’s Eve after a split from his girlfriend, an inquest heard today. Keiran Walsh, 22, split from his partner ... Full story

White Dee, Benefits Street's most infamous and shameless resident

Late on a dark and rainy night, it is all go-go-go down at White Dee’s house in Birmingham. There is a pan of fish stew ... Full story

DJ Chris Moyles claimed to be a second-hand CAR DEALER to save £1 million in celebrity tax avoidance scheme

DJ Chris Moyles claimed to be a second-hand car dealer while presenting Radio 1’s Breakfast Show in a bid to save up to £1million in ... Full story

Comment on: 'Draw a line' under PPI claims so that banks can lend again, says CBI chief

Rate this article

0

Breaking News

Devastated mother tells of anguish at watching teenager drown in lake tragedy not realising it was her own son 

A devastated mother has spoken of her anguish at witnessing a teenager drown in a reservoir tragedy, not realising it was her own son. Melanie Goodship, ...

I've had no complaints about my kissing, says Miliband as he admits he FORGOT to mention the deficit in his conference speech

Ed Miliband today insisted said his wife has 'never complained' about his kissing technique after an awkward moment during his party conference speech. The Labour leader ...

'We're getting warm': Foreign Secretary says hunt for Jihadi John is closing in

Philip Hammond was speaking to CNN at United Nations summit in New York He said the hunt for ISIS executioner with a London accent was moving ...

The hilarious moment a car rolls through a security gate ... as driver tries to chase it

Man pulled four-door sedan up to security gate without putting it into 'park' Rolled right through gate while man scrambled to catch up with his vehicle Onlookers ...

This wouldn't happen in CSI! Hilarious moment road sweeper ducks underneath police cordon and starts cleaning up a crime scene closed off for forensic investigators 

Amused passerby photographs eager road sweeper cleaning crime scene The woman went under a police 'do not cross' cordon to collect the litter But watching police officers ...

This nurse and single mum could be deported to the Philippines because her 9 year old son has AUTISM and will 'be a burden on the health system' 

Nurse and son set to be deported from Australia due to the child's autism Maria Sevilla and son Tyrone have lived in Australian since 2007 Their family ...

Rob Greenfield spends MONTH eating from bins to raise awareness of food waste

Rob Greenfield, 28, saw huge amounts of food thrown away on cycling tripDecided to survive by eating only from dumpsters for a monthIs touring the ...

Karen Williams murder mystery search resumes 24 years after she disappeared

Karen Michelle Williams was last seen in August 1990 Friends last saw her leaving a party in the remote opal mining town of Cooper Pedy in ...

I want some! Sneaky pet pooch watches owner eating watermelon... but looks away each time he's caught staring

Man pretends to eat his food while dog tries to grab a sneaky peek Just before man eats he glances at dog and dog hurriedly turns away Pomeranian ...

Abu Qatada cleared of plotting terror attacks in Jordan and will walk free 

Jordanian court ruled there was insufficient evidence against Abu Qatada He was linked with plans to target Israeli and U.S tourists, and diplomats Earlier David Cameron insisted ...