Lloyds Banking Group (LBG) has confirmed it is adding another £1.8 billion to its PPI compensation pot knocking its pre-tax profits down to £50 million for the third quarter of the year – 97% down on the same period last year.
Chief executive António Horta-Osório said: “I am disappointed that our statutory result was significantly impacted by the additional PPI charge in the third quarter, driven by an unprecedented level of PPI information requests received in August.”
Lloyds is the last of Britain’s big high street banks to announce an increase in PPI provision AFTER the claims deadline on August 29th, but it is by far the biggest and takes its overall provision to close to £22 billion.
Barclays have added £1.4 billion, Royal Bank of Scotland’s increase was £900 million and HSBC added £302 million.
All four banks have said the increases were due to a huge surge of claims in the final weeks leading up to the claims deadline.
The report revealed that Lloyds only had £524 million left of the £20 billion it had previously set aside to pay out successful PPI claims and needed the extra cash available to pay out successful consumers from the pre-deadline surge.
It has the biggest exposure to PPI claims and at the end of July was receiving more than 192,000 new claims and PIRs (PPI Information Requests) a week, as consumers scrambled to get their claims in before the deadline.
The sheer volume of new claims will inevitably affect the length of time it takes for the banks to process the complaints they have received and give a final decision.
Before the deadline, claims would normally receive a final decision in 8 to 16 weeks, but a statement by the Financial Conduct Authority (FCA) suggests the backlog of claims is so big that some cases could take as long as 9 months to resolve.
The statement said: “While firms have large operations in place to deal with PPI complaints, a number of them have informed us that you might not receive a final response to your complaint until summer 2020.”
But successful claimants will not be out of pocket if their decision is delayed as lenders must add 8% interest to the amount owed until the claim is actually paid out.