17:17 01 November 2012
Lloyds Banking Group's payment protection insurance bill is now more than £5billion, as it is putting a further £1billion in its budget to cover alleged PPI reclaims. This comes as authorities have demanded the industry is to compensate customers who have been mis-sold PPI.
This brings the lenders PPI bill total to £5.3billion so far with their latest action being in the third quarter of the year. The Telegraph has stated in one report that the banks loss for the first nine months of this year now stands at £583million.
It is understood the group could expect the PPI bill total to rise again before the end of the financial year.
Based on reports, Lloyds has written to the Financial Ombudsman Services (FOS) to seek help. This is due to the high volume of customer claims they are receiving in regards to alleged mis-sold payment protection insurance.
The bank’s Chief Executive, Antonio Horta-Osorio, is quoted by the BBC saying: “The volume of complaints received in relation to legacy PPI business during the third quarter declined when compared to the previous quarter.”
The Chief added: “However, it remained above the level which we anticipated at the time of our half-year results and as a result the group believes it is appropriate to increase its provision for expected PPI costs by £1bn.
“This increases the expected cost of contact and redress, including administration expenses, to £5.3bn.”
Payment protection insurance was set up to cover debt repayments if a customer was, for some reason, unable to pay their lender. This relates to an individual taking out a loan of some kind, ranging from a car loan to an overdraft.
Over the years people have been filing claims for mis-sold PPI, with some people stating they did not ask for payment protection insurance, or they were unaware it had been added to their policy, and many have been successful and received compensation.
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