RBS 2011 Annual Report Download - page 379

RBS Group 2011 377
21 Short positions
2011 2010 2009
£m £m £m
Debt securities
- Government 32,895 34,056 26,647
- Other issuers 6,164 6,961 10,871
Equity shares 1,980 2,101 2,945
41,039 43,118 40,463
Note:
(1) All short positions are classified as held-for-trading.
22 Accruals, deferred income and other liabilities
2011 2010 2009
£m £m £m
Notes in circulation 1,683 1,793 1,889
Current tax 700 723 429
Accruals 4,941 6,773 7,429
Deferred income 3,481 4,766 5,818
Other liabilities (1) 12,320 9,034 14,762
23,125 23,089 30,327
Note:
(1) Other liabilities include £15 million (2010 - £18 million; 2009 - £10 million) in respect of share-based compensation.
Included in other liabilities are provisions for liabilities and charges as follows:
Payment
Protection
Insurance (1)
£m
Other (2)
£m
Total
£m
At 1 January 2011 — 624 624
Transfer from accruals and other liabilities 215 — 215
Currency translation and other movements — 22 22
Charge to income statement - continuing operations 850 166 1,016
Releases to income statement - continuing operations — (53) (53)
Provisions utilised (320) (193) (513)
At 31 December 2011 745 566 1,311
Notes:
(1) The FSA published its final policy statement on Payment Protection Insurance (PPI) complaint handling and redress in August 2010. The new rules impose significant changes with respect to the
handling of mis-selling PPI complaints. In October 2010, the British Bankers’ Association (BBA) filed an application for judicial review of the FSA’s policy statement and of related guidance issued by
the Financial Ombudsman Service (FOS). In April 2011, the High Court issued judgment in favour of the FSA and the FOS and in May 2011, the BBA announced that it would not appeal that
judgment. During 2011, the Group reached agreement with the FSA on a process for implementation of its policy statement and for the future handling of PPI complaints following which it recorded a
provision of £850 million in respect of PPI.
The principal assumptions underlying the PPI provision are: an assessment of the total number of complaints that the Group will receive; the proportion of these complaints that will result in redress;
and the average cost of such redress. To determine the number of complaints that it expects to receive the Group has analysed the population of PPI policies sold by vintage and by product.
Estimates of the percentage of policyholders that will lodge complaints (the take up rate) and of the number of these that will be upheld have been established based on historical experience,
guidance set out in the FSA policy statements and on anticipated customer contact. A one percent rise in the take up rate across the entire population of PPI policies would increase the provision by
£95 million; a one percent fall would reduce the provision by the same amount. Interest that will be payable on successful complaints has been included in the provision as has the estimated cost to
the Group of administering the redress process. The Group expects the majority of the cash outflows associated with this provision to have occurred by the end of 2013. There are uncertainties as to
the eventual cost of redress which will depend on actual complaint volumes, uphold rates and average redress costs; and in particular, the results of the past book review to be conducted in 2012
and any additional reviews that may be required.
(2) Includes property provisions and other provisions arising in the normal course of business.