View more on these topics

Lloyds chief calls on claims firms to meet bogus PPI costs

Antonio Horta Osorio 460
Lloyds chief executive Antonio Horta-Osorio

Lloyds Banking Group is pushing justice secretary Chris Grayling to change the law so that claims management firms have to cover the cost of lodging invalid or bogus payment protection insurance claims.

The Telegraph reports Lloyds chief executive Antonio Horta-Osorio wrote to Grayling in November saying while the bank is prepared to continue to pay its £850 case fee to the Financial Ombudsman Service for legitimate PPI claims, claims firms should face a penalty if cases are filed inappropriately.

The newspaper says following Horta-Osorio’s letter the Ministry of Justice is understood to be in talks with the British Bankers’ Association to discuss who covers the cost of false claims.

An MoJ spokesman told the paper: “The Government is stepping up its efforts to tackle the compensation culture, and to ensure effective regulation of claims management companies.

“We are looking closely at ways in which we minimise the financial burden on banks, which is created by the poor practice of some claims management companies.”

He added Grayling has responded to Horta-Osorio in the last week, but did not give details about the reply.

Firms currently have to pay a standard FOS case fee of £500 which is charged for the fourth and any subsequent complaint during the year. Last April the FOS also introduced a £350 supplementary case fee for PPI complaints to the FOS where businesses have more than 25 PPI complaints a year.

The FOS is proposing to increase its standard case fee to £550 from April, but to increase the number of free cases from three to 25. The supplementary £350 PPI case fee, paid when the case is referred to the FOS rather than when the case is resolved, is set to remain in place for at least another year.


News and expert analysis straight to your inbox

Sign up


There are 14 comments at the moment, we would love to hear your opinion too.

  1. ONE letter from a bank and fraudulent claims are on the agenda to be looked at.
    IFA’s have been banging on about this and are invisible, ignored or just moaning.
    Makes you realise the power and influence is still with 5 banking groups.

  2. I don’t care if it is a bank that finally gets something done in this area as its way beyond time this was addressed. The banks created this problem and its up to them to put it right as far as I’m concerned. While they’re at it would they like to compensate me for all the wasted time I’ve spent dealing with this; after they unleashed Pandora’s Box?

  3. Whilst I don’t agree with anonymous comments in principle, or banks more generally, I do think Anon@9.06 and Lloyds stance on this is absolutely correct.

    Financial services firms are at a massive disadvantage when it comes to complaints and the system now not only does not discourage fraudulent and vexatious claims but encourages them because there is no deterrent.

    It’s the ‘easy money’ mentality and claims handling firms know it. It would be equitable to transfer the burden of proof back to the accuser and make those who falsely claim bear responsibility for their actions if there is to be confidence in the system.

  4. IFAs don’t speak with a single powerful voice – so no one listens. IFAs ought to sign up to a trade body and be clear on lobbying positions on issues like this.

  5. Lloyds are happy to continue paying the case fee on legitimate complaints, so does this mean they are equally prepared to pay an even larger case fee on the complaints where they say there was no PPI sold and it later turns out there was? FOS figures show 25% of complaints have PPI when it was initially denied.

    Completely agree though the FSA and the FOS only take notice when the banks spout garbage about it being unfair on them – was it fair that they sold so many inappropriate policies and made so much profit from mis-selling? Is this not fraud? Is this not taking money by deception?

  6. To Matther Whiting – “FOS figures show 25% of complaints have PPI when it was initially denied.”

    Link/Source or its not true?

  7. What most commentators on this article fail to appreciate is that it’s not ‘the banks’ that are punished by fraudulent claims, it’s us the public. It’s no different to footing the bill for fraudulent insurance claims. The taxpayer,the shareholders and investors, the pension fund holders etc etc – they are the ones who really suffer. So Mr Osario, I take my hat off to you for being the one who had the guts to stand up and demand change.

  8. This article is confusing in that it is muddying the statistics of cases submitted to the bank and appeal cases submitted to the Financial Ombudsman Service (FOS). The statistics as provided by Lloyds TSB purport show a high number of invalid claims and then link this with the cost of submitting an appeal to FOS. The majority of this claims will arise because the CMC is informed by their client that their loan had a mis-sold PPI policy attached to it. If the loan is more than 6 years old the CMC will be unable to verify the information via a data protection act search and can only go on their client’s instruction as to the policy and make a claim. At this stage if the CMC is informed that the loan did not contain PPI the claim will end and it will not result in a FOS appeal.
    Claims are only submitted to FOS (and a FOS fee charged) if the bank admits PPI but refuses to settle the client claim. It should be noted in the six months to 30 June 2012 the FOS disclosed that of all cases submitted to FOS in respect of PPI complaints that had been rejected by Lloyds TSB Bank plc 98 out of 100 were found to be valid complaints and Lloyds TSB Bank were ordered by FOS to compensate the customer.
    Anthony Brennan LLB ACCA
    CEO Bank Charge Recovery Ltd

  9. It was the banks’ greed which gave rise to ludicrous sales targets and unbearable pressure being put on staff to lie and cheat their way to keep their jobs with the sword hanging over non-sellers. Senior banking executives should be financing this farce by being made to repay salaries and bonuses. It was 100% THEIR fault.

  10. If I was an MP and a couple of IFAs with 500 clients were pestering me over this issue I proably would get on with other things too. However if a bank with over 5 million clients came to my door, I would listen. Although it seems unfair, size and impact will always get listened to.

  11. Thanks Matthew – that number is shockingly high. I have to admit i was not aware of it and still doubt that is the case.

    I own a CMC and we pretty much take the banks word if they say no PPIeven if the clietn thinks they have had it. We certainly dont refer them to FOS.

    So should I, is my next question?

  12. Alan,

    The one thing I would say is under no circumstances take the banks at their word and always get a copy of the application form or agreement. I would say our record on ‘no PPI’ is slightly lower than 25%, but still shockingly high. We dont send all complaints to the FOS (regardless of what some banks and IFA’s say) although I am aware that some of the less reputable CMC’s do. Do what we are supposed to do and get the necessary information, do a Data Protection Act request if you need to (although some of the banks are trying to ignore these, but the ICO doesn’t take the same s*it the FSA does and if they dont comply the ICO make sure they do) and then you have definitive proof that PPI was either sold or not.

    Our general stance is we trust IFA’s (not car sales people – they aren’t IFA’s!) and if an IFA say we didn;t sell a PPI policy, we generally accept it, although we deal with very very few IFA’s. But we dont trust a thing the banks say and want proof of everything – £750 blanket offers – a pro-rata rebate – no evidence of how calculations are made – and they want us to believe they are making this process easy!!! The problem is the FOS and FSA accept what the banks are saying and even tell us we are wasting time when we are trying to check offers.

  13. Lloyds are outragous, work with the CMCS then, all banks give free PPI checks except LLoyds who charge you? LLoyds and HBOS also have the lowest uphold rates and highest uphold rates from FOS, how are they still allowed licence by the FSA.

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm