A U.K. financial-sector regulator announced a later-than-expected final deadline for consumers to submit claims for compensation over mis-sold payment protection insurance.

The deadline would mean that consumers have until around the end of June 2019 to submit their claims. The Financial Conduct Authority said it plans to start a publicity campaign from next June, when it expects to confirm the 2019 cut-off, to encourage consumers to submit their claims in time. The ultimate June 2019 deadline is later than some analysts had expected. 

The regulator also intends to draft a set of rules and guidelines relating to how banks should deal with claims arising from the verdict in the so-called Plevin case, which has been threatening to open another can of regulatory worms for Britain's banking sector.

London's bank stocks fell sharply on Tuesday. The biggest fallers across the sector were Lloyds Banking (LYG) , Royal Bank of Scotland  (RBS)  and Barclays  (BCS) , whose shares lost 3%, 3.5% and 3.1% respectively.

The news came on a morning when bank stocks across Europe were taking a pummeling as investors continued to weigh the possibility that regulators could soon require them to put more toward capital buffers. This is at a time when central bankers could also be about to cut interest rates further into uncharted negative, or record-low, territory, posing an additional threat to already-weak profitability.

The subject of payment protection insurance, or PPI, represents a sore spot for U.K. banks after having cost the sector a total of £24 billion ($31.6 billion) in regulatory charges and compensation since 2011.

PPI is an insurance policy sold with credit products that is designed to help consumers meet credit payments during times of hardship. However, in the U.K, these policies were often billed as an add-on to credit products without the consumer's knowledge.

Almost 50% of payment protection products were included with unsecured one-off loans, 36% were attached to credit cards and 15% were attached to mortgage related products. The banks most implicated in the scandal were Royal Bank of Scotland, Lloyds and Barclays.

The FCA's intention to draft rules and guidelines relating to how firms should deal with claims arising as a result of the Plevin Case shows that the regulator is taking the threat of another bout of conduct related costs seriously.

The Plevin case refers to a Supreme Court ruling in November 2014 which stated that the non-disclosure of commission payments to intermediaries and the non-disclosure of the recipient's identities was a breach of the Consumer Credit Act 1974.

The outcome of the case has been a concern for analysts and the regulator for some time since it could potentially create another avenue through which consumers are able to pursue banks for yet more compensation.

Autonomous Research, an independent outfit chaired by former City minister, and peer, Paul Myners, estimated in July 2015 that if the legal ruling in the Plevin case is allowed to set a precedent that is then applied across the industry, it could cost U.K banks around £33 billion.

The announcement comes just days after European Banking Authority stress tests showed capital buffers at most major European banks proved resilient to the regulator's hypothetical scenario of economic Armageddon.

Barclays came in the weakest of London's banks, with a common equity Tier One capital ratio of 7.1% at the end of the so-called adverse scenario period, but none saw their capital ratios fall below Basel II or III specified minimums.

London's banking sector now faces an extended period of uncertainty, as the U.K prepares to negotiate its exit from the European Union and the sector prepares to implement Bank of England rules on ring-fencing.

Banks with more than £25 billion of assets have until Jan. 1, 2019,  to build capital buffers around their retail and small business banking to separate them from their riskier investment banking activities.

From 2019 onward, such the two separate sides of each business will have to be separately incorporated and capitalized independently of each other. Banks will no longer be able to use retail deposits to funds investment banking or speculative activity.