Lloyds puts aside £375 million extra for PPI claims
Lloyds Banking Group has set aside an extra £375 million to pay for compensation to people who have been mis-sold payment protection insurance (PPI).
This extra money is a result of a rise in the number of complaints received and so far the bank has set aside almost £3.8 billion to cover PPI payments.
Pre-tax profit for the first three months of the year came in at £288 million - a 9% fall from the same period last year.
The 40% government-owned bank says the announcement "reflects the subdued UK economic environment".
PPI is taken out to cover repayments of loans should you fall ill or find yourself out of work but thousands of ineligible policies were mis-sold. The banks paid out £1.9 billion last year to consumers who were mis-sold the insurance, putting the average successful claim at £2,000.
António Horta-Osório, chief executive for the group, says: "Although our results reflected the subdued UK economic environment, the actions we have taken to further reduce costs, strengthen the balance sheet and reduce risk, and the additional investment we have made in our core franchise, are mitigating these effects and will position us well for future growth."
Payment protection insurance is designed to cover you should you fall ill, have an accident or lose your job and can’t make repayments on loans or credit cards. However, research by consumer watchdogs found the cover to be overpriced, filled with exclusions (policies exclude self-employment, contract employees and pre-existing medical conditions) and were often mis-sold because the exclusions were never fully explained. In May 2011, the High Court ruled banks had knowingly mis-sold PPI and ordered them to compensate around two million consumers.