Shares in British lender CYBG dropped 7 percent after the bank pledged to increase provisions by $ 498 million for repaying customers mis-sold payment protection insurance (PPI).
According to CYBG, a mid-sized bank that owns Clydesdale Bank, Yorkshire Bank and the app-based bank B in the UK, an awareness campaign launched by British financial regulatory body the Financial Conduct Authority (FCA) triggered an “elevated level of complaints” in the six months to the end of March. The lender reportedly does not expect the situation to change for some time, partially because of the awareness campaign, which stars Arnold Schwarzenegger.
The FCA started its regulatory campaign earlier this month. The video features a disembodied model of the ‘Terminator’ star’s head, which is calling for people to file claims for mis-sold PPI before the August 2019 deadline. The head, which is moving on caterpillar tracks, urges supermarket customers to “make a decision” and to “do it now.”
CYBG said that the media coverage evoked the profile of Britain’s costliest ever consumer scandal with people urged to buy often worthless insurance that would allegedly help them repay debts in the event of sickness or unemployment.
British lenders have reportedly put aside more than £44 billion (US$ 62.5 billion) to cover those claims. Most of the banks may also be forced to disclose increased provisions as they prepare to publish first quarter reports in the next two weeks. Most of the PPIs were sold to bank clientele between 1990 and 2010.
“Aggressive FCA ad campaigning and scaremongering on the part of claims management companies could mean claim volumes remain high,” analyst John Cronin at Irish broker Goodbody told Reuters.
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