Unending PPI scandal sees Lloyds add GBP 1.9 billion in charges

The cost of the payment protection insurance (PPI) mis-selling scandal has exceeded GBP 22 billion after Lloyds Banking Group revealed it is paying an extra GBP 1.8 billion in payments to compensate customers.

“Obviously disappointing,” was Lloyds’ finance director George Culmer’s apt response.

Up until now, Lloyds had avoided many of the stories that have rocked financial news since the crisis – including the Libor rigging and sub-prime mortgages scandals.

At GBP 10 billion, Lloyds’ total PPI bill means Britain’s biggest high street bank’s compensation is nearly half the UK total.

The news was revealed by the bank in a surprise trading update less than a fortnight before its annual results were due.

Culmer stated that calculating the exact cost of the PPI mis-selling at Lloyds was “fiendishly hard” to calculate, but insisted the figures were “appropriate.”

This is the seventh time Lloyds – owner of Bank of Scotland and Halifax and one third owned by the taxpayer – had risen its estimate PPI bill, a scandal which has rocked the UK’s financial sector and become the biggest mis-selling scandal in UK financial industry.

Two Olympics

The PPI affair has dogged the UK’s financial sector for years.

Sold by banks, building societies, and third-party brokers, high pressure tactics were used to coerce indivials to purchase the protection – which covers loan payments in case of illness or unemployment.

It has been estimated that by May 2008, there were 20 million PPI policies in the UK – and around seven million policies being created every year thereafter.

The scandal has come about as, for the most part, people have either been unable to claim the protection, they were not eligible in the first place, or were not even aware they were paying for the protection.

As of now, Britain’s building societies and banks have reserved around GBP 22.2 billion for PPI mis-selling.

This is enough to pay for the 2012 Olympics twice over.

According to Which?, Britain’s biggest banks – Barclays, HSBC, Lloyds and Royal Bank of Scotland – and Santander, which purchased Alliance & Leicester and Abbey in 2008 and 2004 respectively, are responsible for GBP 19.6 billion of the total.

A further 550,000 complaints

Consumer watchdog Which? has estimated that many of the UK banks involved in the PPI scandal are now closing to releasing all the money previously penned for the bills.

It also states that Lloyds’ hefty additional charge may foreshadow similar revisions at other leading banks.

Lloyds said complaints had fallen in late 2013, but now predicts a further 550,000 complaints.

The bank’s full-year update states that whilst underlying profits were roughly GBP 1 billion better than forecasts at GBP 6.2 billion for 2013, the new write-offs will see a delayed and underwhelming return to statutory profits.

It also means shareholders will have to wait to 2015 before receiving dividends.

1 thought on “Unending PPI scandal sees Lloyds add GBP 1.9 billion in charges”

  1. Some explanations why you could have been mis-sold PPI include:

    it was not explained that PPI was recommended;

    you thought getting PPI was an ailment, or might boost your
    possibilities, of finding a mortgage or different type of credit;

    the coverage was put into your mortgage without your knowledge;

    it wasn’t explained the PPI cover could end prior to the loan or
    credit was repaid.
    If you should be not sure whether your policy was missold you need to contact the
    Financial Ombudsman Service.

    There are various organizations that offer to send claims for mis-sold
    PPI, generally known as claim handlers,
    claims firms or claims management organizations (CMCs).

    If you do choose a state trainer you ought to carefully consider whether to pay
    for an upfront fee before your issue is presented, as
    there is no promise it’ll achieve success and you could be left-out
    of pocket.

    PPI claim handlers often retain as much as 30% of the return, if
    you receive a £5,000 refund you would need to spend £1,500 of it to some
    claim handler.

    If you claim oneself, you will obtain all of any return you’re entitled to.

    Step 4: Complain for your bank

    It is far better produce to them delivering the maximum amount of data when you can concerning the coverage you are worrying
    about and start to become clear about why you think the plan was mis sold.

    The firm or bank has eight months to respond, letting you know whether your criticism has been effective or
    why it needs additional time to check into it.

    If your mortgage was fixed by a corporation that’s no further trading, however you think it might have mis sold you
    PPI, you ought to contact the Financial Services Compensation Scheme (FSCS) to find out how
    to make a state.

    You can deliver the FOS’s free PPI claim type (doc) in their mind even although you presently
    employed it to complain for the company or bank that offered you PPI.

    It is essential that you contact the FOS within six
    months of getting a final result from your corporation, or
    the FOS may possibly not be able to deal with
    your issue.

    Reply

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