Latest payout takes bank’s cost of payment protection insurance mis-selling scandal to £17bn.
Lloyds Banking Group has taken another £1bn hit for payment protection insurance, taking its total bill for the mis-selling scandal to £17bn.
The fallout has cost the industry £37bn so far. The insurance product was sold alongside loans and intended to pay out when customers were unable to make payments.
George Culmer, the bank’s finance director, said the £1bn top-up for the bank’s PPI bill should be the last big one and was driven by the decision by the Financial Conduct Authority to set a deadline of June 2019 – rather than spring 2018 – for claims.
Lloyds has incurred the largest single bill for the scandal as it also owns HBOS, which it took over during the 2008 banking crisis.
The charge for PPI was revealed as the bank reported its profits for the first nine of months of the year which were 50% higher at £3.2bn despite the PPI charge. In the third quarter, however, profits were down 15% at £811m.
Listed among the charges taken by the bank was another provision of £150m for packaged accounts, where products such as travel insurance and roadside assistance policies are bundled up alongside current accounts.
The taxpayer still owns a 9% stake in Lloyds – down from 43% at the time of the financial crisis – and the slump its shares has forced chancellor Philip Hammond to abandon a plan to sell shares to the public at the discount. Instead Hammond has signalled that the remaining shares will be sold to City investors on the stock market.
