Lloyds Bank sets aside further £750m for PPI claims

Lloyds Bank has announced that it has set aside a further £750m for anticipated claims for mis-sold payment protection insurance (PPI) by consumers.

The part state-owned bank, which was bailed out back in 2008 after the financial meltdown, has said that it has set the sum aside to contribute to the bill for the scandal.

This takes the total Lloyds bill to around £8 billion, the largest contributor, with the total bill among all banks at £16 billion. A study carried out back in August by consumer group Which? suggested that the total cost of the PPI scandal is double the amount it cost to stage the 2012 London Olympics.

Lloyds also admitted “issues” with the way some of its employees handled PPI complaints. A Times investigation found that call centre staff at Royal Mint Court in central London were “[playing] the system” so that claimants did not receive compensation for wrongly sold PPI.

The bank hit troubles back in 2008 at the height of the financial meltdown, leading to a £20billion government bailout.

The Treasury recently sold 6% of its share in Lloyds off to private investors, bringing in £61m profit for the taxpayer, but the government still owns around a third of the bank. This decision was criticised by some, including Lawrence Tomlinson, entrepreneur-in-residence at the Department for Business, Innovation and Skills (BIS), who said, “What if, a number of years down the line, the share price increases six-fold? Wouldn’t it be good to keep that as a national asset instead of palming it off to private ownership too early, having absorbed all the risk and taken none of the return?”

To the end of September 2013, the bank saw profits of £1.52 billion, almost double the figure for the same period of 2012.

Further reading:

Lloyds faces criticism over bonuses and PPI mis-selling after revealing a £570m annual loss

Big five banks’ profits swallowed up by fines

Treasury sells 6% of Lloyds stake, raking in £61m profit for the taxpayer

32m have suffered nuisance calls about PPI, says Citizens’ Advice

PPI bill double the cost of London Olympics, says consumer group