Lloyds Bank to Refund £300m to 600,000 Customers for PPI and Mortgage Arrears Failures

Lloyds Banking Group has taken nearly a £1 billion hit after revealing it will refund customers for failing to handle mortgage arrears policies and has set aside additional money in order to address the mis-selling of Payment Protection Insurance (PPI).

The provider estimated that it’ll have to shell out roughly around £283 million so as to pay off approximately 590,000 mortgage consumers who had been wrongly charged between 2009 and 2016, just because of the way Lloyds had applied policies regarding financial difficulty assessments.

This is on top of £700 million, which has been put aside to deal with the PPI claims.

This came just months after Lloyds forked out an additional £350 million so as to cover the ballooning expense of PPI mis-selling scandal, which has now reached over £18 billion.

All the extra provisions are set to cover roughly around 9,000 PPI claims a week through to the final deadline-which is set at the end of August 2019- followed by large number of complaints over the last 3 quarters.

Previously, the bank had made an arrangement from approximately 7,700 gripes per week.

The Chief Executive Antonio Horta-Osorio told the reporters during a media conference call that they had even proclaimed that they’ll be reimbursing the charges to mortgage consumers who had been fallen in the mortgage arrears wherein the bank hadn’t applied a reliable approach.

The chief executive further added that, the bank would be proactively repaying all their customers who had incurred those charges, which included those individuals who might not have been affected, so as to put things in the right place as swiftly as possible.

The provisions that were detailed in half year earning showed a 4% increase in the statutory pre-tax proceeds to £2.54 billion, whilst the sum total income increased by 4% to £9.27 billion in the 6 months.

This was the first set of results to be released by bank, as it had returned to private hands earlier in this year.

Lloyds bank has increased their provisions for PPI claims roughly around 17 times and according to their chief financial officer George Culmer, they were disappointed to be doing it all over again.

When asked by the reporters whether there might be another increase in the running bill, the financial officer said that it would be based on where all those future volume of complaints go.

Lloyds-that saved HBOS at the height of financial crisis- believed that it was still in the process of reimbursing the victims of fraud at the hands of HBOS Reading employees between the year 2003 and 2007, after setting aside £100 million in order to deal with the compensation expenses.

The fraudulent financiers were put behind bars earlier in this year for £245 million loans scam that ruined numerous businesses before they misspent the proceeds on luxurious holidays.

As per Mr Horta-Osorio, as a management team they have a committed to put all these inheritance charges behind as quickly as possible. However, he admitted that there are still going to be redress expenses whilst running a banking business.

He further said that nobody would lend money and expect not to get it back, but this does happen and you do have impairments. Also, similarly in a retail business, there are going to be mistakes, which will be made and you need to address people and there’ll always be a suitable redress charge.