It seems banks now want to reduce their payout for PPI, which has now reached £26 billion.
According to a national fiscal think-tank, UK banks may have to pay up to £33 billion should the Financial Conduct Authority consider the Plevin case as a necessary intervention to serve justice for the millions sold payment protection insurance.
While it may be a shock for many investors, the case is rightful in its resolution. The Supreme Court ruled that Susan Plevin was mis sold payment protection insurance but found her product useful. However, because of the unreported high commission her broker received upon sale of her PPI, she was due her compensation.
Brokers are expected to tell customers the commission they will receive upon the sale of payment protection insurance. The FCA is currently reviewing the case and will decide by the end of the month if additional interventions are necessary.
Share prices for UK banks especially the top four high-street banks are expected to drop. Along with new PPI recompense comes new administrative costs, which is further inflated by unscrupulous claims management companies pushing bogus claims into the system.
Meanwhile, many expect the FCA to allow the thing to blow over because it intends to ensure market stability. However, they point out that the FCA is also inclined to deliver justice, which essentially makes the new PPI situation the biggest paradox in the world of finance today.