Lloyds has set aside an extra £550m for payment protection insurance related costs as the deadline for claims fast approaches. This brings the provision put aside by the giant bank to £650m this year and to more than £20bn in total.
In its half-year financial results published today, Lloyds said this was driven by a “significant increase in information request volumes” which it experienced in the second quarter.
Lloyds chief financial officer George Culmer told the BBC that the company was “caught by surprise” by the extent to which people are coming forward.
The bank is now receiving 190,000 PPI-related queries a week, according to Culmer, compared to the usual 70,000. He also said 10 per cent of these queries then turn into claims.
The FCA set the final deadline for submitting claims against any lender as 29 August 2019 two years ago. The regulator then kicked off an advertisement campaign featuring an animatronic head of Arnold Schwarzenegger to raise awareness of the deadline.
The bank said the new provision contributed to a 7 per cent decline in its half-year pre-tax profits to £2.9bn.
Lenders combined have already paid out some £36bn in PPI compensation since 2011 as of May, according to FCA figures.
Another one-off cost in Lloyds results was a charge for exiting the Standard Life Aberdeen investment management agreement. Last week, it emerged that the bank is to pay the asset manager £140m in settlement after an arbitral tribunal ruled that Lloyds did not have the right to terminate the £109bn Scottish Widows mandate.