24 August 2015
July 2015 and whilst most of us were enjoying the odd few days of summer, Lloyds Banking Group were once again making headlines. Beleaguered and battered by various scandals, the one that refuses to leave it, is the mis-selling of payment protection insurance (PPI).
Just when you think it may be dying away, the PPI mis-selling scandal and its fallout for the banks and lenders surges back in to the limelight.
The collective bill for the PPI compensation that all the banks have mad thus far stands at an eye watering £27 billion or, nearly a £1,000 for each household in the UK.
But, the biggest and most staggering milestone has been reached by Lloyds Banking Group. Partly owned by the British tax payer, Lloyds Banking Group has set aside another £1.4 billion in addition to the £12 billion that it has already paid out thus far for mis-selling its product to thousands of its customers.
This announcement affected how people saw the bank as an investment opportunity with their shares dropping 2.82 p the day this additional funding was announced, with individual shares standing at 83.2p.
Despite all this, the banking group is not in the financial turmoil you would think it is. Despite the sharp fall in share value, its profits have not suffered too much, still posting a profit surge of 38% in the first half of 2015. However, analysts believe this is a short-lived victory as this profit could tail off or be swallowed in the remaining six months of the year as PPI compensation claims continue to be made against it.
The record fine of £117 million levied against it by the Financial Conduct Authority in June will not doubt have made life a little more difficult for the bank. The fine was made against them for mis-handling PPI compensation claims that customers made.
Lloyds Banking Group have 7,000 staff working on cases on a daily basis, with the average pay out being around £2,000 per case. But the bank has angered customers further by suggesting that a deadline should be applied.
As yet, the recommendations from any deadline has yet to be discussed or recommendations made by the authority regulator. The Lloyds Chief executive however feels that if implemented fairly, a deadline could be a 'positive thing'.