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Lloyds accused of cutting PPI payouts following BBC investigation

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.”


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There are 4 comments at the moment, we would love to hear your opinion too.

  1. So that will be approximately 59% of cases where they are using the alternative redress rules incorrectly then!!!

    and how many people will know that they can appeal this and will appeal it?

    Just another way of Lloyds ripping people off and the FOS will do nothing about it as it is in line with their guidance – the FOS is not a checking service.

  2. Annonyman …..”The FOS is not a checking service”. It is in fact no worthwhile kind of service at all.

  3. Freddie, have to agree entirely! Sorry it was more of comment that why do the FOS put on their decisions letters ‘this offer is broadly in-line with out guidance’ – what does that mean? Broadly in-line with means absolutely nothing at all! and worse than that, if you do, as our Claims Management Regulator say we must do, you check the offer and find any queries contact the company in question, you get the standard answer ‘we are now dealing with the FOS, your authority is now invalid’. So we go back to the FOS and say this offer is wrong and they come back with the same stock answer ‘we are not a checking service and have no reason to doubt the validity of the offer’!

    RBS were accepting FOS decisions for quite a while and were offering a flat rate of £750 irrespective of the amount of PPI. The FOS response – this is their offer, the client can accept or reject it despite the fact they we have uphold the complaint.

    IFA’s if you really feel the FOS fall on the side of the client everytime, please let me tell you they dont! And i would be surprised if you can find one CMC that feels any different. The FOS have been corrupted by the banks and are now no longer independent of either party.

    I was dealing with a case last week (and this was not the first) where the OMBUDSMAN, not an adjudicator, looked at the FACT FIND that was marked and answered correctly, stated that ‘would it be beneficial if you had a policy that paid out the difference between the loan amount outstanding and the amount you received in a claim? YES / NO The client ticked NO, and there were 4 questions along the same lines all answered NO. Conclusion the client didn’t want the policy. However the OMBUDSMAN stated that they felt the questions may have been ticked inappropriately and as the client was eligible and possibly had a need the advice was suitable!!

    IFA’s take note – there is no need to complete a fact find as the FOS will just look at things how they want! They are a disgrace!

  4. The FOS appears to be a political tool, it has no interest in staying within the law.

    Extract from another article appears below, but quite relevant….

    “The Financial Ombudsman Service must be able to make rulings that are not bound by a strict application of the law or regulatory rules in order to ensure consumers are treated fairly, according to the service’s interim chief executive.

    Deciding outcomes of complaints based on strict application of the law or Financial Conduct Authority regulations can lead to overly harsh consumer outcomes, interim chief ombudsman and chief executive Tony Boorman writes in the latest issue of Ombudsman News.”

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