Footsie companies brace for £25bn fines and legal costs
Banks massively increased their reserves for paying fines and litigation last year in a sign that despite the plethora of scandals that has already broken over the financial industry the sector is expecting still more pain.
Financial firms pushed their combined expected legal liabilities to £9.22bn in 2013, up 43 per cent on the previous year, according to an analysis by Thomson Reuters. The large four UK banks – Royal Bank of Scotland, Barclays, HSBC and Lloyds – earmarked a further £2.5bn to cover the cost of settling claims by customers and regulatory fines.
Last week RBS revealed a further £3bn provision, which is expected to push the 81 per cent state-owned bank to an £8bn loss for the 2013 year. The bank said this sum was to cover litigation and other claims relating to toxic mortgage-backed securities it offloaded before the financial crisis, as well mis-sold payment protection and interest rate hedging products.
Raichel Hopkinson, head of the Practical Law Dispute Resolution Service at Thomson Reuters, predicted banks were likely to have to set even more aside in 2014. “The Government’s plans to reform the UK consumer law regime and the possibility of smaller claims being aggregated to secure third-party litigation funding may encourage more claims against banks – and a continuing need for increased legal provision,” she said.
Other large firms also increased their provisions for various legal costs last year. Across the FTSE 100, companies set aside 12 per cent more, taking total provisions to £24.6bn. After banks, the biggest increases came in the energy sector. Oil and gas companies raised provisions for regulatory and legal action by 40 per cent. The biggest driver was BP, which recently lost a court case to limit its pay-outs to businesses affected by the 2010 Gulf of Mexico spill.
- 1 Barbarians vs Samoa interrupted by sprinklers as fans criticise lack of Wi-Fi and poor seating at West Ham's Olympic Stadium
- 2 Caitlyn Jenner car crash: Driver who died in collision sued by surviving passengers for $18.5m
- 3 Watch the Supermoon live: How to see the brightest Moon of the year tonight
- 4 Hulk Hogan wants to be Donald Trump's running mate in the US Presidential election
- 5 Blood Moon and Supermoon: September to bring brightest – and dimmest – full Moon of the year on same night
Caitlyn Jenner car crash: Driver who died in collision sued by surviving passengers for $18.5m
Celebrity Big Brother 2015: Tila Tequila kicked off show after 'describing Hitler as a good man'
Watch the Supermoon live: How to see the brightest Moon of the year tonight
Hulk Hogan wants to be Donald Trump's running mate in the US Presidential election
Blood Moon and Supermoon: September to bring brightest – and dimmest – full Moon of the year on same night
Climate change: 2015 will be the hottest year on record 'by a mile', experts say
'Women only' train carriages: Jeremy Corbyn unveils radical move to tackle public harassment
Black holes are a passage to another universe, says Stephen Hawking
Iain Duncan Smith 'should resign over disability benefit death figures', says Jeremy Corbyn
Tony Blair attacks Jeremy Corbyn's 'Alice In Wonderland' politics
Stock up on canned food for stock market crash, warns former Gordon Brown adviser
iJobs Money & Business
£25000 - £30000 per annum: Recruitment Genius: From modest beginnings the comp...
£35000 - £40000 per annum: Recruitment Genius: From modest beginnings the comp...
£15000 - £65000 per annum: Recruitment Genius: This is an exciting opportunity...
£18000 - £20000 per annum: Recruitment Genius: This is a fantastic opportunity...