Lloyds Banking Group has today announced a further £1bn to be set aside both for further Payment Protection Insurance (PPI) mis-selling claims, and compensation for some 590,000 unfairly charged mortgage customers.
This is good news for the many thousands of consumers thought yet to claim for mis-selling of PPI since the issue blew up in 2011.
The almost-£1bn will come out of Lloyds’ announced first-half profits of £2.5bn and change.
It is made up of a further £700m to be set aside specifically for further PPI claims, as well as £283m to repay 590,000 mortgage customers.
The mortgage repayments are for mortgage customers who have been overcharged for being in arrears between 2009 and 2016.
The Financial Conduct Authority, which has been investigating this issue, concluded that Lloyds was not proactive enough in its attempts to understand the specific circumstances of its customers when they fell into arrears, and applied charges in light of poor information.
The FCA has ordered Lloyds to repay all customers in regards to certain specific charges across the entire period, and unlike some similar rulings in the past, is forcing Lloyds to take a proactive approach – Lloyds itself will have to identify, contact and compensate each affected customer.
The mortgage repayment charges are for arrears management, for broken payment arrangements, and for any legal costs that may have arisen for the customer as a result.
Lloyds has also been told by the FCA not to quibble when it comes to properly compensating customers for both inconvenience and distress caused. This is the 17th time Lloyds Banking Group has had to increase its PPI compensation chest since 2011.
After taking over HBOS in January of 2009, Lloyds Banking Group became by far the biggest force in UK financial services, which is, in part, why its share of the ongoing PPI mis-selling scandal appears to have no end in sight.
It is telling of the sheer scale of Lloyds that it can soak up a billion in compensation payments and still post a £1.6Bn profit.
The move also sends a clear message to those who feel they have been mis-sold to by Lloyds, but still have not claimed. It is expecting your call.
Lloyds has also not ruled out further funds to be set aside in future.