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Lloyds and Barclays latest banks facing surge in PPI claims

Both Lloyds Banking Group and Barclays have used their half-year results to warn investors that they face potentially billions of pounds in charges after a final surge in claims relating to payment protection insurance (PPI).

People seeking to make a claim over mis-sold PPI were given a final deadline of August 29 by the Financial Conduct Authority (FCA) meeting.

 

In a statement to the London Stock Exchange, Barclays said it had set aside cumulative provisions of £9.6bn for PPI redress. As at June 30, 2019, the bank said £9.2bn had been claimed, leaving a residual provision of £360m.

 

However, Barclays said it was still processing PPI-related claims, enquiries and information requests but it already expects to increase its provision in its Q3 2019 results by between £1.2bn and £1.6bn.

 

Lloyds, meanwhile, said it faced a bill of £1.2bn-£1.8bn after receiving between 600,000 and 800,000 claims per week in the run-up to the final deadline.

 

By May 31, Lloyds had set aside some £19.5bn to cover PPI claims, although that will have risen in anticipation of the surge in claims.

 

PPI was designed to cover loan repayments if borrowers fell ill or lost their job, but millions of policies were sold to people who did not want or need them, mainly between 1990 and 2010.

The deadline, set by the Financial Conduct Authority (FCA) to seek compensation was August 29, prompting a surge of last-minute claims from consumers.

 

Other UK banks have had similar experiences, with the Royal Bank of Scotland (RBS) revealing in September that it potentially faces a £900m additional charge after last-minute claims.

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