Lloyds admits PPI payout lapses

Lloyds Bank building

In a week when MPs and Lords are finalising a report on how to improve standards in banking, it is embarrassing for Lloyds that it has been accused of failing to show due care when processing complaints from customers who say they were mis-sold PPI credit insurance.

A reporter from the Times newspaper who went undercover at one of Lloyds' complaints handling centres, Royal Mint Court in London, says he was nudged to ignore possible fraud by Lloyds salesmen and also steered that most complainants would give up if rejected first time.

The regulator, the Financial Conduct Authority (FCA), told me it has been working with Lloyds to address the issues raised by the Times.

Lloyds insists that independently of the investigation it identified shortcomings - or what it calls "issues" - in the complaints handling centre, which is one of eight it operates.

In fact it says it already had concerns by around February this year, before the Times reporter signed up for a job there, and it was taking a look at procedures.

That may be so. And the FCA says it has been working with Lloyds on this for some time.

£4.3bn compensation bill

But it rather begs the question why it has taken many weeks for Lloyds to get to the bottom of what was going on and take action.

It also doesn't explain why the staff at the centre felt motivated to depart from best practice.

The centre was operated for Lloyds by the leading accounting firm, Deloitte. Lloyds said it terminated its contract with Deloitte in May and is retraining relevant staff.

To date Lloyds has paid out £4.3bn in compensation to 1.3 million customers who were victims of PPI mis-selling.

All banks have paid out far more in PPI compensation than they initially expected - and Lloyds is by far the biggest compensation payer.

In 2011, it pulled out of legal action taken with other banks to contest the regulators' insistence that compensation would be paid and it was the first bank to make big provisions against the cost of such compensation.

Lloyds says it has no evidence of shortcomings at its seven other complaints handling centres.

The bank insists that whatever went wrong at Royal Mint Court was not due to inappropriate incentives given to staff there.

As for the FCA, it is reviewing the way all banks handle and process PPI complaints, on top of its specific work with Lloyds.

Robert Peston Article written by Robert Peston Robert Peston Economics editor

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  • rate this

    Comment number 224.

    Is Antonio Horta Osario's rhetoric beginning to be found out. He pontificates loudly about bankers needing to be different and to be aligned with the public mood. The reality this ongoing PPI shambles, a £1.3Million pay package for his PR man Matt Young and he introduces an LTIP scheme where half the rewards are based on internal not external measures. Sounds like same old banker in reality.

  • rate this

    Comment number 223.

    Not everyone had a choice i only found out last year that out of 6 loans i had with Lloyds 5 of them had PPI against them. Lloyds told me in October last year that i was not misold PPI i appealed their decision in November to which i then had a phone call in February from Lloyds after calling many times i was then told in April they had overturned their decision and guess what i am still waiting

  • rate this

    Comment number 222.

    hah, my comment was removed because I'm not allowed to name the criminals responsible for the great crash of 2008. These crooks are running around scott free, the BBC aiding and abbetting them, the banking scandal of the century goes totally unreported by the BBC. This place is a joke.

  • rate this

    Comment number 221.

    I'm not saying anyone who took out PPI insurance is foolish - the banks pushed it on you really hard when you took out a loan. I'm guilty of not reading the small-print but even I worked out this insurance was rubbish and that it would add substantially to my repayments.

    I think people need to take responsibility if they chose to take it out.

  • rate this

    Comment number 220.

    As for the nuisance phone calls send these companies a bill for wasting your time.
    £50 per hour or part thereof.


Comments 5 of 224



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