Banks could be forced to pay £25bn in compensation for payment protection insurance (PPI) mis-selling, almost double the amount they have set aside, according to The Times.
The paper said calculations using the FSA’s monthly PPI payout figures and historic selling data showed the amount banks pay out would dwarf the £13bn previously estimated.
The jump comes after the FSA ordered banks to write to customers sold PPI to invite them to consider claims.
Banks announced big increases to provisions in their third-quarter results last year.
In November, Lloyds Banking Group increased its provision by £1bn to £5.3bn, Barclays set aside a further £700m, and Royal Bank of Scotland hiked its provision by £400m, to £1.7bn. HSBC raised its provision for British ‘customer redress programmes’, mostly owing to PPI selling, by $353 to $2.1bn
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