PPI scandal now double cost of Olympics
Richard Lloyd, Which? executive director, made the statement following the release of Lloyd’s half year results which stated £250m of the provision related to redress costs and £200m was set aside for PPI administration costs.
He said: “It is staggering that the cost of the PPI mis-selling scandal now stands at more than double the cost of the Olympic Games.”
The latest provision brings Lloyds total PPI costs to £7.275bn.
There had been a drop in Lloyds’ uphold rates from 87% in the second half of 2011 to 43% in the second half of 2012.
But, in the second half of 2012, the Financial Ombudsman upheld 86% of Lloyds TSB’s and 81% of Bank of Scotland’s PPI complaints in customers’ favour.
In its statement to the stock exchange the bank said: “The volume of PPI complaints continues to fall in line with expectations with average monthly complaint volumes down 12% on the first quarter and weekly complaints averaging approximately 12,500 in the second quarter of 2013.”
Monthly complaint volumes were on average 40% below those in the second half of 2012.
But it reported that costs in the second quarter continued to be higher than expected due to the acceleration of the settlement of cases currently held with the Financial Ombudsman Service, VAT ruling, and slightly higher uphold and settlement rates.
The bank has been informed that it has been referred to the enforcement team of the Financial Conduct Authority for investigation over its governance of a third party supplier and failings in the PPI complaint handling process.
It said: “We have made a provision of £50 million with regards to the likely administration costs of this exercise.”
Lloyd said: “We have repeatedly raised concerns with the banks, regulators and Financial Ombudsman Service about the worrying variation in quality of PPI complaint handling and welcome further investigation from the regulator.”
He added: “There are rules on how banks should handle complaints and they should be making it as easy as possible for people entitled to a refund to claim back their money without any hassle.
“There must be tough action taken against any bank found breaching the rules.”