FSA: cost of PPI mis-selling clampdown could hit £3.2bn

10 August 2010

The cost of the Financial Services Authority's (FSA) clampdown on the mis-selling of payment protection insurance (PPI) could rise to £3.2 billion, up from the up to £3 billion cost the regulator had previously estimated. The FSA has revised its cost estimates after changing its view on the number of complaints firms selling PPI will attract when the new measures are implemented. It said that firms are likely to face an average of 550,000 complaints per year, rather than the 500,000 it previously estimated in its March consultation paper on the sector, as it had seen greater than anticipated levels of complaints in 2010. The regulator added that 35 general insurance intermediaries could fail as a result of the FSA measures, and that £35 million could be demanded of firms in their Financial Services Compensation Scheme (FSCS) class as a result. However, that figure is less than the 100 firms it estimated could fail, and the £40 million cost to firms through the FSCS it predicted in March. Published by CityWire