Lloyds & The PPI Scandal
The last few years have put the UK banking sector under the spot light. This was largely due to what has turned out to be the biggest and costliest banking scandal to ever surface in Britain: Payment Protection Insurance (PPI). Lloyds Banking Group were responsible for over half of all the mis-sold PPI policies, and given the size of the group it’s not difficult to see why. The mis-selling of Payment Protection Insurance has resulted in Lloyds having to pay out millions to customers whom they mis-sold policies to.
5 biggest banks in the UK have set aside a further £32.6 billion to deal with the total compensation bill.
Source: FT Graphic
In This Guide...
- Payment Protection Insurance: The Facts
- Starting a Claim with PPI.co.uk
- The Origins of Lloyds
- The Beginning of a Scandal
- Lloyds Responsible for Over 50% of Mis-Sold Policies
- ‘Have I Been Mis-Sold?’
- What did Lloyds do about PPI policies that were mis-sold?
- Making a Claim
Payment Protection Insurance: The Facts
PPI was deliberately wrapped up in a shroud of mystery, and this was because confusing customers proved to be a good tactic for selling policies.
The basics of PPI are very simple, it is a form of insurance that covers repayments on finance products such as mortgages, loans and credit cards if the holder was for some reason unable to work and meet the monthly payments.
This could be due to a number of reasons which could cause them to need a significant amount of time away from work, these include:
- Involuntary Redundancy
- Long-term Sickness
Starting a Claim with PPI.co.uk
PPI.co.uk has been successfully winning refunds for our customers since 2007. To date we have processed over 160,000 successful claims awarding refunds totalling £274 million. We’ve gained substantial knowledge over the years and this means that being able to draw similarities to other cases can sometimes be the key to getting back what is owed to you.
Now, all that’s necessary is your name, date of birth and the address you were residing at when the policy was taken out. This information will allow the banks to run searches across their databases and find any PPI that could have been sold to you. This type of agreement is relatively new and only available to select companies such as PPI.co.uk. Previously an account number had to be provided to start the claim, otherwise the bank would dismiss it.
Whatever you decide to do, you must do it quickly. The FCA are imposing a 2019 ‘claim by’ limit, meaning that any outstanding PPI complaints would be dismissed if they are submitted past 29th August 2019, so act quickly and start a claim today.
It’s quite easy to procrastinate and put things off until tomorrow but more often than not, tomorrow never comes.
So, if you believe that you have been mis-sold PPI,
it’s important to act now before it’s too late.
There is a deadline for you to submit a claim for a refund
The Financial Conduct Authority has put forward its intentions to introduce a PPI ‘claim by’ deadline for 2019.
The Financial Regulator wants the ruling to be confirmed by the middle of 2017 along with a public awareness campaign.
The big five banks have paid out £24bn in compensation so far and have set aside a further £32.6bn to deal with the estimated claims that will come forward during that time. It’s therefore essential to check if you were either knowingly or unknowingly mis-sold PPI at any time with a simple, no obligation, free check before it’s too late!
The Origins of Lloyds
The roots of Lloyds Banking Group stretch back to the 1700’s. Initially founded by John Taylor, Sampson Lloyd and their two sons, the bank was one of the very first created in Birmingham.
In the 1850’s the firms name changed to Lloyds & Company. The conversion to joint-stock status kick started an explosion of growth. Over 200 banks were taken over in the next half-century; and the beginning of the 20th century showed a significant period of change for the bank; beginning to expand overseas. The Cheltenham & Gloucester Building Society joined Lloyds Bank in 1995, this was the first time a bank and a building society had ever been associated. Later that year Lloyds became the undisputed biggest force in UK domestic banking after the merger with TSB.
Lloyds Banking Group is one of the biggest finance providers on the high street; consisting of:
- Lloyds Bank
- Bank of Scotland
- Scottish Widows
- Black Horse
- Lex Autolease
- Birmingham Midshires
The Beginning of a Scandal
Consumer magazine Which? Magazine first questioned PPI back in 1998, mostly due to the expense of the product and the way it was being sold. Despite this concern PPI was still being flogged by banks all over the country, Lloyds was the biggest offender. It took until 2005 for the Financial Services Authority to finally take control of the situation and release a report that detailed the poor practices that were being used to sell policies to customers.
In 2006, small companies providing finance were punished with large fines from the FSA for their contribution to mis-selling. From 2007, the big banks, who thought themselves an untouchable force were beginning to feel the heat of big fines and their processes were being carefully scrutinised. Lloyds was certainly not exempt from this and received a record fine of £117m for mishandling legitimate PPI claims.
Research in 2008 suggested that over 2 million people in the UK had been paying for PPI policies that they had no chance of being able to claim on. A further 1.3 million people were believed to have been sold the insurance on the proviso that it was the only they could be approved for a line of credit – which is of course false.
UK mis-sold PPI scandal statistics
£10 BillionIn payouts alone in the UK.
By 2008, 20 million PPI policies existed in the UK that’s nearly 1 in 3 of the 2008 UK population
Lloyds Responsible for Over 50% of Mis-Sold Policies
In 2013 The Times released an investigative article about the way the bank operated refunds and how they initially sold policies to customers. In the investigation the reporter from The Times took part in the recruitment process to work as a PPI complaint handler. During the process of this training the reporter was told that some sales advisors had knowingly fabricated PPI information during loan sales. Even to the extent where sales advisors had ticked blank opt-in boxes on loan forms, to add on a PPI policy whether the customer wanted it or not.
Prospective employees were told that the role could be ‘morally difficult’ and the complaints handlers must treat all PPI applications as if they were completed by the customer and the customer alone – despite information on the contrary.
‘Have I Been Mis-Sold?’
Lloyds were one of many lenders that set aside millions to compensate customers who were caught out by Lloyds’ underhand sales techniques. Policies were mis-sold in a variety of different ways on a variety of products including loans, credit cards and mortgages. Once the banks cottoned on to how profitable these policies were, they encouraged their sales advisors to sell the PPI policies with the promise of big commission payments.
Customer Unaware of PPI: In many situations, PPI was added to a customer’s policy and they were not aware of it at all; they were paying for a policy all along without knowing.
Heavy Handed: Sales advisors would often employ tactics that were morally and ethically wrong to sell policies. Such as telling people what could potentially go wrong if they didn’t take out the insurance.
Selling to Customers Who Couldn’t Claim: Some sales staff would use underhand techniques to sell the PPI. The policies were even sold to people would not have been covered therefore leaving them unable to claim on the policy even if something did happen to them or their employment status.
PPI Was Not Optional: The sales advisors did not clarify to the customer that PPI was an option and they were free to opt out or to buy cover elsewhere if it came to it. Many Lloyds customers agreed to the policy because they were told that it was a non-optional part of them being able to take out a line of credit.
What did Lloyds do about PPI policies that were mis-sold?
When mis-selling went public, Lloyds customers were sent correspondence telling them that they could have been unwittingly involved in mis-selling and could be due a refund.
People could then make contact with Lloyds and send details of their circumstances and Lloyds would then investigate the claim.
However, as previously mentioned Lloyds Banking Group were fined a record amount of £117 million for its significant failings and unacceptable behaviour when it came to handling these claims. The FCA (Financial Conduct Authority) assessed the period between March 2012 and May 2013, when Lloyds, RBS, and Black Horse rejected more than 37% of the 2.3 million PPI complaints that it studied – many of these were wrongly rejected. Many people are unaware that they can claim again now and potentially be successful and be awarded a refund.
As The Times article highlighted, Lloyds often told their staff to assume that all incoming PPI complaints were false and reject them; even if they had knowledge suggesting otherwise.
Making a Claim
If you decide to submit a claim directly with Lloyds to claim back what is rightfully yours, you will need to provide Lloyds with as much information about your policy as you can. According to Lloyds the following information is needed to process your claim as quickly and as efficiently as possible:
- Any PPI account policy numbers.
- Details of the key dates of the policy.
- Information about how the policy was sold.
- Employment status at the time the policy was sold.
- Details of any savings or other insurances you had when you took out the policy.
- What you took out the finance for and the amount you paid off.
If you fall into the customers who had their initial claim rejected by Lloyds or believe your Lloyds PPI claim was wrongly rejected, then don’t give up. You can contact the Financial Ombudsman who will independently assess your claim and decide if your case is worth continuing. If you don’t have all the information available, then don’t fret; there are other options available to you. Contact ppi.co.uk today!