(Reuters) - CYBG Plc (L:CYBGC) on Wednesday said it expected to take a pre-tax charge of 202 million pounds in its half-year results through March as it increased the provision to cover the cost of an earlier insurance industry scandal.
The banking group said in a statement that provisions for covering the cost of the UK's payment protection insurance mis-selling scandal would increase by £350 million ($500.05 million) as at March 31.
The additional cost would result in a reduction in the Group's Common Equity Tier 1 ratio of about 100 basis points as at Dec. 31, 2017, the lender added in the statement.
In 2013, the Financial Conduct Authority (FCA), the conduct regulator for financial services firms and financial markets in the UK said that customers were given misleading and unclear information about the policies and ended up buying card protection they did not need because they were already covered by their banks.(https://reut.rs/2H9aPOP)
British insurer CPP and 13 high street banks and credit card issuers, including Clydesdale, had agreed in 2013 to pay 1.3 billion pounds to millions of customers who were mis-sold CPP credit card insurance policies as Britain tried to draw a line under years of mis-selling financial products, dating back to the sale of pensions and endowment mortgages in the 1980s.
CYBG, which made its London debut after it was spun off by National Australia Bank (AX:NAB), in November last year had increased its provisions for the payout as at September 2017 by £403 million.
The lender said it has received about 59,000 complaints over the past six months, much higher than they had anticipated, pushing them to increase provision for costs.