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Bloomberg
Lloyds Banking Group Plc may set aside hundreds of millions of pounds in the second quarter to compensate customers improperly sold payment protection insurance as claims continue to flood in.
The redress costs will add to about 18 billion pounds ($23 billion) already booked by Britain’s biggest mortgage lender since the start of the scandal. Analysts at Morgan Stanley expect a charge of 410 million pounds for the London-based bank, according to a note to investors. Barclays Plc estimates a 285 million-pound top up for Lloyds.
Lenders in the UK have already set aside almost 40 billion pounds to compensate customers who were improperly sold payment protection insurance, with Lloyds paying out the most so far. A recent ruling by a local English court and a new proposal from regulators to broaden the scope of claims raise the prospect of further pain for the banks.
A high-profile advertising campaign by the Financial Conduct Authority featuring the image of Arnold Schwarzenegger “appears to have brought refund request volumes back,†UBS Group AG analysts including Jason Napier said in a note to clients last week.
PPI was often sold using aggressive tactics and in the worst cases, banks misled customers by telling them that PPI was mandatory for loans. In other scenarios, it was sold without giving clients a full explanation of what it would cover. Clients have until August 2019 to make a complaint. Lloyds is scheduled to report second-quarter earnings on August 1.