Five questions answered… on Royal Bank of Scotland’s PPI provisions

The cost of PPI mis-selling continues to rise.

RBS has set aside even more money to cover the cost of compensation claims for mis-sold PPI. We answer five questions on RBS’s PPI payouts.

How much more has RBS put aside to cover PPI mis-selling claims?

RBS has announced it will be setting aside a further £400m to cover future anticipated PPI compensation claims. 

It has also set aside another £50m to cover the cost of compensation from a recent computer systems failure which affected customers earlier in the year.

How much has the bank spent on PPI mis-selling claims already?

Including this latest fund, a staggering £1.7bn

What about other banks?  

In total, and including any latest provisions, the PPI scandal has cost UK banks £10.8bn. 

Lloyds banking group has also announced it has put aside a further £1bn of provisions to cover claims. 

What is RBS current financial position?

RBS, which is 80 per cent owned by the UK government, has reported a pre-tax loss of £1.26bn for the three months to 30 September, against a £2bn profit a year earlier. 

The bank is also bracing itself over possible steep penalties for any involvement it might of had in alleged manipulation of the Libor inter-bank lending rate. Barclays was recently fined £290 million for attempting to manipulate libor. 

Another big hit for the bank is a £1.5bn charge against its own debt due to an accounting rule that requires it to take a loss on increases in the value of its bonds. 

RBS's operating profits for the third quarter were £1bn, up from a £650m profit in the second quarter. However these figures discount the PPI mis-selling and other charges. 

What has RBS said?

Chief Executive of RBS, Stephen Hester, told the BBC: 

"The extraordinary challenges which RBS faced following the financial crisis are being worked through successfully"

"The five year restructuring plan is now in its later stages with important work still to do, including an emphasis on dealing with reputational issues now that the bank's safety and soundness has advanced so well."

Adding that the bank is too often was looked upon as putting the short-term interests of shareholders and staff above customers. 

Photograph: Getty Images

Heidi Vella is a features writer for

Photo: Getty Images
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The Fire Brigades Union reaffiliates to Labour - what does it mean?

Any union rejoining Labour will be welcomed by most in the party - but the impact on the party's internal politics will be smaller than you think.

The Fire Brigades Union (FBU) has voted to reaffiliate to the Labour party, in what is seen as a boost to Jeremy Corbyn. What does it mean for Labour’s internal politics?

Firstly, technically, the FBU has never affliated before as they are notionally part of the civil service - however, following the firefighters' strike in 2004, they decisively broke with Labour.

The main impact will be felt on the floor of Labour party conference. Although the FBU’s membership – at around 38,000 – is too small to have a material effect on the outcome of votes themselves, it will change the tenor of the motions put before party conference.

The FBU’s leadership is not only to the left of most unions in the Trades Union Congress (TUC), it is more inclined to bring motions relating to foreign affairs than other unions with similar politics (it is more internationalist in focus than, say, the PCS, another union that may affiliate due to Corbyn’s leadership). Motions on Israel/Palestine, the nuclear deterrent, and other issues, will find more support from FBU delegates than it has from other affiliated trade unions.

In terms of the balance of power between the affiliated unions themselves, the FBU’s re-entry into Labour politics is unlikely to be much of a gamechanger. Trade union positions, elected by trade union delegates at conference, are unlikely to be moved leftwards by the reaffiliation of the FBU. Unite, the GMB, Unison and Usdaw are all large enough to all-but-guarantee themselves a seat around the NEC. Community, a small centrist union, has already lost its place on the NEC in favour of the bakers’ union, which is more aligned to Tom Watson than Jeremy Corbyn.

Matt Wrack, the FBU’s General Secretary, will be a genuine ally to Corbyn and John McDonnell. Len McCluskey and Dave Prentis were both bounced into endorsing Corbyn by their executives and did so less than wholeheartedly. Tim Roache, the newly-elected General Secretary of the GMB, has publicly supported Corbyn but is seen as a more moderate voice at the TUC. Only Dave Ward of the Communication Workers’ Union, who lent staff and resources to both Corbyn’s campaign team and to the parliamentary staff of Corbyn and McDonnell, is truly on side.

The impact of reaffiliation may be felt more keenly in local parties. The FBU’s membership looks small in real terms compared Unite and Unison have memberships of over a million, while the GMB and Usdaw are around the half-a-million mark, but is much more impressive when you consider that there are just 48,000 firefighters in Britain. This may make them more likely to participate in internal elections than other affiliated trade unionists, just 60,000 of whom voted in the Labour leadership election in 2015. However, it is worth noting that it is statistically unlikely most firefighters are Corbynites - those that are will mostly have already joined themselves. The affiliation, while a morale boost for many in the Labour party, is unlikely to prove as significant to the direction of the party as the outcome of Unison’s general secretary election or the struggle for power at the top of Unite in 2018. 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.