Lloyds Banking Group has been accused of cutting the compensation it pays to payment protection insurance claimants, the BBC reports.
In an investigation to be broadcast on Radio 4 today, the BBC claims Lloyds has been using a regulatory provision called “alternative redress” to reduce the amount of PPI compensation it pays out.
Under alternative redress rules banks can assume customers who were mis-sold single-premium PPI policies would have bought a cheaper regular premium policy instead.
In these cases, the bank can deduct the cost of the regular premium policy from the full compensation payment.
PPI expert Cliff D’Arcy, who used to work in the HBOS PPI operation, told the BBC Lloyds had saved more than £60m over the past year by cutting compensation.
Lloyds said 11 per cent of offers it made in the fourth quarter of 2013 were made by applying alternative redress.
In a statement Lloyds said: “The compensation that we pay to customers is determined on an individual basis and is in line with regulatory guidance.
“The overturn rates for cases relating to comparative redress are in line with other PPI cases. These cases will continue to be reviewed on an individual basis.”