Lloyds find a convenient loophole to hold back millions in PPI compensation
Allegedly, Lloyds Banking Group - who have never been known not to serve themselves first – have been withholding millions of pounds of PPI compensation, thanks to a loophole in the law.
The Financial Ombudsman Service say Lloyds is using an ‘alternative redress’ scheme, which complies with the Financial Conduct Authority’s rules, as a way not to give customers their full payouts.
The alternative redress scheme is an obscure, generalised rule that assumes that customers took out regular premium policies – and that they must be reimbursed for that.
But some customers didn’t take out regular premium policies. They were sold single policies on more than one loan. So Lloyds have been deducting the cost of a cheaper regular policy from the payouts, even though some customers are owed more.
For example, one Halifax customer with 2 loans was offered £2300 PPI compensation. But when she brought the case to the Financial Ombudsman, Lloyds were asked to pay her an extra £1200.
Lloyd’s said yes, it WAS using the alternative redress system, but argued that it had done nothing wrong, saying: "The FCA handbook is very clear that in these specific circumstances, the provider should give redress that puts the customer in the position they would have been in had the customer taken a regular premium policy.’
If you want to watch Lloyd’s squirm on TV, a BBC special about the PPI compensation, ‘Britain’s Biggest Banking Scandal’ is due to air tonight.