The cost of the Payment Protection Insurance scandal has reached £13.4 billion for the Lloyds Banking Group, the highest amount amongst all banks and lenders in the UK.
Over £1.4 billion was announced recently in provisions for PPI compensation payouts, with £117 million having been settled with the Financial Conduct Authority (FCA) over its handling of PPI complaints earlier this year.
Another area of mis-selling for which there is money put aside is packaged bank accounts – for which £175 million has been so far allocated.
“Regrettably, the UK banking sector is still being impacted by conduct issues, including litigation and PPI,” commented Antonio Horta-Osori, the LLoyds Chief Executive.
This comes as the bank reports a rise in profits overall; shares were paid out recently for the first time since 2008. The bank, which had to be rescued by taxpayer funds at the height of the financial crisis, is on course to become privatised soon too. The UK government’s stake in Lloyds is now less than 15%.
Lloyds are expecting complaints about PPI to wind down over the coming year or two, although if they do not prove to do so it would cost the bank approximately an extra £3 billion in provisions for PPI.
The Lloyds Banking Group reportedly employ around 7000 staff to deal with PPI complaints, and spend millions on related administration. Billions have been put aside for hundreds of thousands of PPI compensation claims cases which have still yet to be bought forward, and many previously rejected claims are also now being re-examined.
Whilst hoping that PPI compensation cases would be decreasing rapidly, Lloyds’ Chief Executive Horta-Osori noted the addition of further PPI provisions was “disappointing.” He did, however, mention that the bank was able to act from “a position of financial and capital strength.”