Lloyds accused of short-changing PPI claimants
Lloyds Banking Group has been cutting the compensation it pays to payment protection insurance (PPI) claimants, a BBC investigation has revealed.25 March 2014
PPI expert Cliff D'Arcy told the BBC Lloyds had saved more than £60m over the past year by cutting compensation.
Lloyds refused to be interviewed on the issue. It was offering the correct level of compensation in line with regulatory guidance, a statement said.
Lloyds cites a little-known regulatory provision called "alternative redress".
Alternative redress allows a bank, in specified circumstances, to assume that customers to whom it wrongly sold single-premium PPI policies would have bought a cheaper, regular premium PPI policy instead.
In such cases, a bank is entitled to deduct the cost of the regular premium policy from the full compensation they would otherwise have had to pay.
For claimants, this deduction can make a large difference to the compensation Lloyds offers.