Deutsche Bank analysts said the PPI deadline reduces the risk associated with the erratic and huge payouts for payment protection insurance. However, it made clear that reduction does not mean elimination.
“Overall, we think the announcements help reduce some of the tail risks of an open-ended PPI claims process,” they said.
“The proposed deadline should help stop the market forecasting PPI redress into perpetuity, but is far enough out that it is unlikely to change consensus forecasts.”
Analysts also took the Plevin case to light, saying that the suggested guidelines did not have the detrimental effect other analysts feared after the court decision. The FCA decided that the new Plevin rules will not apply to most products covered under the Consumer Credit Act of 2006.
Despite analysts predicting the UK banking industry might add £2bn for Lloyds in the next two years for PPI, the Financial Conduct Authority has no definite figure for the total banks might have to pay out for mis-sold PPI in the last few years to 2018.
However, they made certain the banks will spend £42.2m on advertising campaigns spreading awareness to consumers mis-sold ppi and have not made a claim.
The FCA’s research revealed that about 70 per cent of consumers have not the motivation to make a claim because of the PPI scandal’s open-ended nature.