Lloyds demands earlier cut-off point for PPI mis-selling claims

Bank urges Financial Conduct Authority to set tighter time bar for claims, after saying its total payouts for mis-sold insurance nears £14bn

Lloyds Banking Group intends to lobby the City regulator for an earlier cut-off point for customers’ claims on payment protection insurance compensation, as its bill for the scandal reaches almost £14bn.

The bailed-out bank took another £500m provision for PPI in the third quarter and admitted it was facing an additional charge of £100m for potential claims on other products sold through branches.

Lloyds’ PPI update came as the bank reported a 33% increase in profits to £2.1bn in the first nine months of the year, after a sharp fall in bad debts negated a fall in revenue.

But the market was disappointed with the performance, and shares in the bank – now less than 11% owned by taxpayers, down from 43% at the time of the 2008 crisis – were among the biggest fallers in the FTSE 100, dropping 4.5% to 74p.

As the bank’s provision for PPI hit £13.9bn, the finance director, George Culmer, said a proposal by the Financial Conduct Authority to put a 2018 time bar on claims did not go far enough. “We think a shorter time bar … will get people to act more quickly,” said Culmer. “We think two years is excessive,” he said.

Lloyds accounts for half the industry’s total bill for the PPI scandal, under which the FCA is trying to draw a line by setting a time limit for claims. The regulator intends to consult on the proposal and also on the implications for a court ruling given to a customer, Susan Plevin, who received compensation because of the commission paid to the seller of her PPI policy.

Lloyds also admitted it could need to take further PPI provisions “if reactive complaint volumes do not decline or the decline is delayed”.

These are the bank’s first results since George Osborne announced he would sell £2bn of its shares to the public at a discount next year. Lloyds will have to foot the bill for the sale, which is likely to to amount to £20m, Culmer said.

They are also the first figures since the Competition and Markets Authority said it would step back from draconian measures to break up banks to bolster competition.

Lloyds is the market leader with a 25% share of current accounts, although its chief executive, António Horta-Osório, said proposals to make it easier to switch accounts would prove costly for the industry.

A year ago, Horta-Osório had announced plans to axe 9,000 jobs and close 200 branches as part of a new three-year strategy for the bank.

The government has received £15.5bn from offloading its stake in the bank through a series of stock market sales. But the shares are now trading very close to the average price at which the taxpayer’s stake was acquired – 73.6p.

Lloyds said its effective tax rate was 25% in the third quarter, higher than the corporation tax rate, in part because Osborne was no longer allowing the cost of the PPI scandal to be tax deductible.

Contributor

Jill Treanor

The GuardianTramp

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