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

Beaver Scouts rocked by love triangle scandal after 'whisky-infused' father posts online message revealing 'affair'

A Beaver Scout group has been hit by allegations of an affair between its married leader and one of the women who volunteers there after ... Full story

Pictured: The incredible moment that a smartly-dressed City worker takes on smash-and-grab jewellery shop raider brandishing a MACHETE

Incredible photos show the moment a member of the public attempted to tackle a robber from an armed gang who raided a jewellery store.The three-strong ... Full story

Thousands gather in Mecca as King Abdullah is laid to rest in Riyadh after losing battle with pneumonia

The body of King Abdullah has been buried in an unmarked grave in Riyadh less than 24 hours after his death plunged Saudi Arabia into ... Full story

Flags at half mast and fawning praise for a King 'loved by his people' sparks furious backlash over violent rule

Fawning public tributes paid to the late King of Saudi Arabia have sparked a furious public backlash today - as campaigners attacked his reign for ... Full story

Bailiffs trying to evict cancer-stricken father, Tom Crawford, over mortgage dispute are forced to retreat after 500 strangers form human blockade around his bungalow

This is the moment when bailiffs trying to evict a cancer-stricken father were forced to retreat after 500 strangers formed a human blockade around his ... Full story

Teacher who starred in TV show Educating Yorkshire is banned from the classroom for life after having sleeping with two former pupils

A secondary school teacher who starred in Channel 4 series Educating Yorkshire has been banned from the classroom for life after admitting to having sex ... Full story

Ray Mears AXED from caravans event after slamming them as 'hideous' and 'ghastly'

TV survival expert Ray Mears has been axed as a speaker at a motorhome exhibition after slamming caravans live on air.The outdoor enthusiast had been ... Full story

Which nations have the highest obesity rates?

You might think the U.S. is the most obese nation in the world - but if you do, you are wrong.  Soaring rates of obesity ... Full story

Tributes to Leon Brittan as he dies of cancer aged 75 - while Westminster STILL awaits launch of sex inquiry

Controversial former Home Secretary Leon Brittan has died, his family confirmed today.The Conservative peer passed away in his London home last night aged 75 after ... Full story

Mother pays tribute to her 'beautiful daughter' as young British tourist dies 'of natural causes' on Koh Tao island

The devastated mother of a British backpacker who died while travelling in Thailand has paid tribute to her 'beautiful' daughter.Christina Annesley, 23, from Orpington in ... Full story

Sex attacker caught after victim bit off his TONGUE

A sex attacker has been locked up after one of his victims bit off his tongue, which was later used to provide vital DNA evidence.Ferdinand ... Full story

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

Rate this article

0

Featured author

Robert Livingston

Breaking News

King Abdullah dead: David Cameron and world leaders due to arrive in Saudi Arabia as debate over UK tributes grows

Leaders from across the globe are due to arrive in Saudi Arabia today to pay their respects following the death of King Abdullah. The British ...

Superman flies into British airspace

Three owner Li Ka-shing is known as “superman” by the Hong Kong media. But with his sprawling business empire the 86-year-old tycoon is more like ...

Third of senior officers face axe as head of army vows to oust 'penpushers and yes men'

Up to a third of senior officers will be cut as part of cutbacks of the Army and reform of how the highest ranks are ...

Cleared in court - but police poster boy’s still under a cloud

In a glittering 20-year career in the police, John Buttress was a poster boy for his force, helping to protect Britain from terrorists and winning ...

Cleared in court - but police poster boy's still under a cloud

In a glittering 20-year career in the police, John Buttress was a poster boy for his force, helping to protect Britain from terrorists and winning ...

Standard & Poor's sub-prime wrist slap ignores the real problem

It has taken the Securities and Exchange Commission (SEC) the best part of eight years finally to get around to settling with the credit ratings ...

The world's biggest ego-system generates social insecurity

There is a natural order of things in Davos. The chief executives want to meet heads of state. The bankers want to meet chief executives. ...

Taking a big bite from the Apple

Executives at the world's most famous technology company gathered a bushel of ripe, and extremely sweet, Apples this year, filling up on cash and stock ...

Market Report: Super Mario has delivered for investors

Super Mario has delivered for investors. The European Central Bank’s blockbuster bond-buying programme, announced by its President, Mario Draghi, on Thursday, helped spur the Footsie ...

O2 will 'be more dog' but guess who foots bill?

As they say in the City, the share price never lies. So why was it that, as Vodafone yesterday faced the prospect of becoming the smallest ...