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worlds largest PPI banks

Legal bills, fines and expense of compensating mistreated consumers has reached around £264bn for 20 of the world’s largest banks for over five years up to 2016, as per the new research, which raises doubt regarding the efforts put in by major financial services players in order to restore trust in the sector.


This figure is higher in comparison to the previous 5 year period-when the expenses amounted to £252bn- and is up by 32% on the period 2008-2012, the first time when the information was gathered by the CCP Research Foundation, one of the bodies which examine the “conduct expenses” of banks.


As per the report, the data showed that, ten years on from the commencement of financial crisis, the outcomes of misconduct continued to hang over the banking industry.


But, according to the recent analysis, it shows that in the year 2016, the sum total amount that was put aside by banks surveyed increased to an excess of £28.6bn-which is higher compared to the last year when there had been a drop from the peak of £63bn in 2014.


As per the research director of the foundation, Chris Stears, trust in and trustworthiness of the banks has to certainly correlate to and be conditional on banks conduct expenses. Also, constant level of conduct expense provisioning is nerve-racking.


He further said that, it remains to be seen whether or not the provisions would crystallise in the year 2017 or later, and what effect it’d have on the combined level of conduct expenses.


Two of the UK’s high street banks-that is Lloyds Banking Group (LBG) and Royal Bank of Scotland (RBS)-are in the top five lists with the largest conduct costs.


RBS has set aside additional provisions for legal costs and fines mainly related to an impending penalty for mis-selling toxic bonds in the run-up to financial crisis.


According to the foundation, the residential mortgage bond securitisation mis-selling scandal is accountable for nearly £66bn of the expenses incurred during the 5 year period and is the single biggest factor.


Also, the PPI scandal-that is the major reason why Lloyds Banking Group is in the list- has caused banks to set aside approximately £27bn. Lloyds bank has set aside an excess of £17bn in order to pay compensation for mis-selling of PPI.


The Managing Director of the foundation, Roger McCormick said that it is sensible enough to presume that the long-running sorry tale of provisions and payments for PPI should come to an end ultimately, though the banks have made extra provision for the mis-selling of over £1.5bn midway through the year 2017.


The foundation has been using 5 year rolling periods so as to try to offer a long term scrutiny of the expenses, which the banks have to face in order to rectify their previous mistakes-a major theme of the last ten years-when even they were hit by penalties for supporting interest rates and foreign exchange market.


McCormick further said that, as has been the case since the first table, they’re finding themselves wondering when, if ever, the level of conduct expenses would begin to reduce.


He noted that 2016 figures showed rapid turn down in fines from the FCA that issued fine worth £819m in the initial 6 months of 2015 alone, due to market rigging scandals.


The figures also comprise of cash set aside for future penalties by the top 20 banks, including fine and other expense they’ve incurred to embark upon legal and regulatory claims.


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