Taxpayer-backed Lloyds Banking Group has been accused of using a loophole to slash awards to payment protection insurance (PPI) claimants in a move allegedly saving it tens of millions of pounds.
An investigation by the BBC claims that Lloyds has been reducing payouts to personal loan customers who believe they were wrongly sold PPI by using so-called comparative - or alternative - redress.
One expert blasted it a “scandal coming out of a scandal” and said Lloyds had been able to cut its PPI compensation bill by more than £60 million since using the loophole over the past year.
The BBC alleges that figures from the Professional Financial Claims Association, which represents claims management companies, shows Lloyds has used comparative redress in as many as one in four cases in some months.
But Lloyds – whose total PPI compensation bill is nearly £10bn – disputed the figures, saying they were “incorrect and deeply misleading” and said it used comparative redress in 5% of all PPI cases since it was introduced last February. Comparative redress can be used in specific cases when a customer was sold a notorious single premium policy.