Payment Protection Insurance – Lloyds offers PPI refunds
Lloyds Banking Group has written to customers who were mis-sold PPI to offer compensation
– so far 3,500 customers have been contacted, with the final total set to reach over 200,000.
The customers affected are those with Halifax-branded cards
and Lloyds is offering to repay the mis-sold PPI
or to waive exclusions for those customers who still want cover to meet credit card debts if their circumstances change.
Lloyds bought out Halifax/Bank of Scotland in 2008 and a review has shown that customers of the latter two have been sold unsuitable payment protection cover
– designed to cover your loan and credit card payments if you’re unable to work or meet your payments.
The move is all the more surprising because the British Bankers’ Association
is currently taking on the Financial Services Authority
over this very matter – the FSA wants the BBA to review past payment protection sales – and the banks certainly aren’t happy with that, even though 70% of consumers’ cases referred to the Financial Ombudsman concerning PPI are settled in the consumers’ favour.
Lloyds has indeed reviewed past PPI sales and found 231,000 Halifax credit card customers who have been mis-sold PPI
. Lloyds is offering either a full refund of the premiums paid – plus interest – or the bank will waive exclusions that were not explained properly when the customer signed up to the PPI agreement. For example, self-employed people who may not be able to work for a time were not told that their PPI agreement didn’t cover this eventuality. Lloyds may well now waive this exclusion, making their PPI cover amongst the best possible for the self-employed.
In light of the current legal challenge, Lloyds, along with most banks, is freezing the claims process pending the result of the BBA’s case against the FSA
, though Lloyds does stress that, despite the judicial review, they have taken this pro-active action to contact customers who they believe have been mis-sold PPI.
However the City watchdog, the Financial Services Authority, has warned the banks that they must still hear PPI complaints
whilst the legal case rumbles on. It’s not the first time the FSA has ordered banks to stop ignoring customer complaints, but in this case it seems that Lloyds has in fact listened up and done the decent thing, pro-actively heading off those complaints by identifying customers mis-sold PPI and putting procedures in place to right the wrongs. Useful links