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Lloyds to pay £283m in redress over mortgage arrears errors

Lloyds Banking Group has set aside £283m to pay redress to around 590,000 customers for mortgage arrears errors.

Lloyds will refund all fees for arrears management and broken payment arrangements from 1 January 2009 to January 2016.

Mortgage customers involved in litigation with Lloyds over that period will also be refunded any litigation fees that were unfairly charged.

A statement from the FCA says Lloyds acknowledged it did not always do enough to understand customers’ circumstances when they fell into arrears to make sure their payment plans were affordable and sustainable.

Lloyds will also offer payments for distress and inconvenience caused to customers and losses customers might have incurred as a result of not being able to keep up with their payment plans.

FCA executive director for retail and authorisations supervision Jonathan Davidson says: “Ensuring fair treatment of customers, especially those in financial difficulties or who are vulnerable, is a key priority for the FCA. We continue to engage with Lloyds as it works to improve the way it treats customers in arrears.”

The redress scheme will refund the accrued interest on all fees up to the remediation date or, where customers have already paid the fees, the date when the fees were paid. Lloyds will also pay an additional 8 per cent interest for customers deprived of funds.

Increase in profits

Lloyds today also released its financial results for the six months ending 30 June 2017, posting pre-tax profits of £2.5bn, a 4 per cent increase on the previous year.

It has also set aside a further £700m to cover payment protection insurance claims.

Lloyds Banking Group chief executive António Horta-Osório says: “Following the successful transformation of the group to become a simple, low risk, UK-focused retail and commercial bank, we have delivered another strong set of results with increased underlying and statutory profit and strong capital generation, whilst completing the acquisition of MBNA and returning to full private ownership.”

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