February 20, 2013

Lloyds Receives £4.3 Million Fine for PPI Redress Delays, Adds £1 Billion to PPI provision

Category: Finance — Tags: , , , , , – admin @ 4:18 am

Industry giant Lloyds Banking Group recently received a lashing from the Financial Services Authority because of their delays in providing customers their PPI redress. Around 140,000 customers waited for more than 28 days to six months in receiving their compensation. Lloyds says that its delays are a result of their underestimation of the PPI mis selling intensity in the United Kingdom.

Lloyds also apologised to customers for the delays. The Financial Services Authority noted that the bank could not come up with any explanation to customers about the delays when consumers followed up on their PPI claims. The regulator also found out that Lloyds’ PPI repayment system is below their standards.

The bank is also the leader in the PPI compensation provisions, with a whopping £5.3 billion. Practically, this makes almost 50% of the total compensation bill, which is around £13 billion. Lloyds has also earmarked an additional £1 billion for PPI claims as they continue to earn higher numbers of PPI claims.

The group is also involved in a recent scandal involving the mis selling of interest rate swap products to different business and companies, to which they provide a compensation amount of £24 million.

Former Lloyds Boss Eric Daniels, who brought most of the PPI troubles to Lloyds during his term, said that half of the claims Lloyds receives were not legitimate claims. He points at bank consumers saying that they file bogus claims to increase the compensation amounts. However, the Financial Ombudsman disproves Daniels’ point as their estimate tells them 3 out of 4 Lloyds-rejected claims are actually valid claims.