Bank adds £350m to PPI claims budget to deal with heightened complaints
Yorkshire Bank’s parent, the Clydesdale and Yorkshire Banking Group (CYBG), is to put a further £350m into its PPI claims budget to close final cases and deal with an expected 110,000 complaints before August 2019.
The Board has approved the extra £350m. This includes £88m for the costs required to close-out the final cases investigated as part of the Group’s completed remediation programme, £186m for around 110,000 additional customer initiated complaints received before the August 2019 time frame and £76m administration costs.
CYBG said this morning: “Within the customer-initiated complaint programme, CYBG, in line with the rest of the industry, has experienced a sustained period of elevated complaints in the six months to 31 March 2018 with the peak occurring in January.
“The Group has received approximately 59,000 complaints during this period and this is higher than forecast. The elevated level of complaints has been driven by a combination of factors including heightened media coverage, the FCA advertising campaign and increased activity by claims management companies.”
CYBG said it had conducted a detailed review of its recent experience and undertaken a “robust scenario analysis” to reassess its view of the outlook for complaint volumes. The Group now expects the current level of complaints to remain at an elevated level for a period of time, followed by a reduction in volumes and costs the August 2019 time bar is reached.
CYBG therefore expects to recognise a charge of £202m (pre-tax) in its income statement for the six month period ended 31 March 2018.
The bank added: “The Group has been operating two PPI programmes concurrently over the past six months, comprising the proactive customer contact remediation exercise and customer-initiated new complaints handling. The Group has now completed the review of all cases within the scope of the remediation programme.
“The review of the final cases was more complicated and time-consuming than previously anticipated and, as a result, the Group has increased the provision required to close-out the programme.”
