Bank sets aside more funds after late PPI claims rush

Co-operative Bank in Manchester

The rush to the end-of-August deadline for PPI claims has led to a further increase of up to £75m in provisions by Manchester-based Co-op Bank.

In a market update today the bank said payment protection insurance enquiry volumes surged as the August 29 deadline loomed.

Further to the bank’s update on September 5, the bank today provided further detail of the impact of increased enquiry and complaint volumes relating to PPI.

It said, as seen by other market participants, the bank received substantially greater volumes of complaints and enquiries than expected in the final month prior to the complaint deadline, the majority of which were received in the final week.

The bank said while the quality of the complaints and enquiries remains uncertain, its initial estimate is that an additional charge of £55m to £75m is required in respect of paying PPI redress and associated operational costs.

It will take several months to process the volumes received in August, during which time further information regarding the quality of the complaints will be determined.

The bank expects to reflect a more accurate figure in its third quarter trading update, but it is likely that the majority of processing will not be completed until the first half of 2020.

As at June 30, the bank had an outstanding provision relating to PPI of £38.7m, including provision for Official Receiver complaints.

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