UK newspaper The Times has reported that Lloyds Banking Group Banking Group, a UK financial institution, has been found to have failed in its customer complaints service following an undercover investigation by a Times reporter.
According to The Times, contractors employed at a Lloyds centre, that was set up to deal with Payment protection insurance (PPI) selling, were advised to play the system and ignore possible fraud by Lloyds salesmen. Call centre staff were encouraged to delay or reject compensation claims in the hope that customers would drop their claim.
PPI was intended to cover loan repayments for policyholders who became ill, had an accident or lost their jobs, however these policies are said to have been mis-sold by banks to customers who did not require them or would not even have been able to make a claim. It is alleged that there were numerous instances of malpractice and that bank salesmen faked PPI information in agreements on loan sales. Also customers were not made aware that policies had been attached to their credit cards or loans.
Lloyds was the first bank to agree to start paying PPI compensation in 2011 and has reportedly paid out £4.3bn to 1.3 million victims of the PPI mis-selling. It stated to the BBC that it independently identified issues at the centre called Royal Mint Court earlier this year, which are now being addressed. The bank has ended its contract with Deloitte, which has operated the complaints unit since 2011 and Royal Mint Court employees are being re-trained by a new supplier in line with Lloyds policies and procedures.
Claimants can take their disputes with a bank to the Financial Ombudsman Service, an independent service in the UK. Recent figures from the ombudsman are said to reveal that it received 42,195 PPI claims relating to Lloyds in the second half of last year, the highest number of any bank or building society. In 86% of these cases the customer claim was found to be correct.
The BBC reported that the Financial Conduct Authority (FCA), which regulates UK banks,is carrying out reviews of PPI complaint handling procedures and will publish its findings later in the summer. Major UK banks are also said to have reserved £15bn to cover potential PPI compensation costs.