The PPI mis-selling saga continues to unfold as Lloyds Banking Group adds another £700 million to meet claims demands. This recent addition brings the PPI clean-up bill to a whopping £4.2 billion; £1 billion more than originally estimated.
The taxpayer-backed bank added a £375 million provision to its PPI payout fund in the first half of the year, following the shortfall of the initial £3.2 billion first set aside to deal with the problem.
Lloyds is not the only bank that has had to add extra provisions to its compensation funds. HSBC will also be adding a further £340 million to fund PPI compensation claims. The five biggest banks alone have put aside a total of £8.8 billion, bringing to total PPI provisions from all UK banks to £10 billion.
The Financial Services Authority (FSA) believes that a total of 10.8 million people could be entitled to a pay out. Earlier in the year the FSA ordered the banks to write to consumers that we missold payment protection insurance to tell them that they may be entitled to a redress. Of the 12 million customers that will be contacted by their bank, up to 90% could be eligible for a payout.
Which? Chief Executive Peter Vicary-Smtih said: “These latest figures from the banks show that PPI is now on course to become the biggest consumer financial scandal of all time.”