LONDON, Sept 4 — Royal Bank of Scotland has taken another sizeable hit from compensation for mis-sold credit insurance, after claims surged before last week’s deadline, it announced today.
RBS said in a statement that it will take a extra charge of between £600 million and £900 million (US$723 million and US$1.1 billion) for payment protection insurance (PPI) in its third quarter results.
That comes on top of the £5.3 billion in provisions already set aside by the bank.
The financial services giant will publish its third-quarter earnings, for the three months to September, on October 24.
Britons had faced a deadline to claim compensation for mis-sold PPI that has cost the UK banking sector billions of pounds.
Customers had until August 29 to question lenders whether they have had PPI added to credit products such as loans, mortgages or payment cards.
While PPI was intended to cover missed payments, for example if a policy holder lost their job, in many cases consumers were unaware the insurance had been added to a product, while others would never have benefitted despite pressured into taking it.
Edinburgh-based RBS is still 62-percent owned by the British government after receiving the world’s biggest banking bailout during the notorious global financial crisis. — AFP
