Business

Banks still considering appeal on PPI

Lloyds branch
Image caption Lloyds has broken ranks with the rest of the banking industry and will now pay up for PPI claims

Senior banking executives are meeting to discuss appealing a ruling over Payment Protection Insurance (PPI).

Last week, the High Court ruled that banks had wrongfully sold PPI to millions and that they are now obliged to refund all affected customers.

Lloyds, the biggest seller of PPI, said this week it would repay all customers missold such policies, other banks may continue to fight claims.

PPI is an insurance policy designed to cover loan repayments.

While they are in theory completely legitimate forms of protection, millions of policies were sold by banks knowing that customers did not qualify for payouts under any circumstances.

Lloyds Banking Group has said it would set aside £3.2bn to repay money wrongfully charged to its PPI customers.

The BBC understands that the banks meeting, including HSBC, RBS and Barclays, are disappointed with Lloyds' decision to break ranks and not appeal.

None of the major other banks have agreed to make any refunds in this area.

The banks must agree their course before Tuesday, which is the deadline for any legal appeals.

The final figure for PPI compensation could reach up to £6.5bn with Barclays and RBS potentially liable, if they don't appeal, for roughly £1bn each.

The British Bankers Association has already said that its members are very concerned at the "dangerous precedent" which would be set if the banks were forced to refund all PPI customers retrospectively.

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