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Gloucestershire Business News

Lloyds hit by big bill for late PPI claims

Lloyds Banking Group is facing an extra bill of up to £1.8bn to cover a late rush on PPI claims.

The bank, which has a headquarters in Barnwood, said it saw a spike in claims in the run-up to the final deadline of 29th August, as reported by the BBC.

As a result, Lloyds said it would be hit by an extra charge of between £1.2 and £1.8bn.

Lloyds also said it would be putting its share buyback plan - a way of returning money to investors - on hold, because of the uncertainty over PPI payments.

Payment Protection Insurance (PPI) was designed to cover loan repayments if borrowers fell ill or lost their job, but it was often sold to people who did not want or need it.

Banks and other providers sold millions of PPI policies, mainly between 1990 and 2010. Last month's final deadline for compensation saw a surge of last-minute claims.

At the time of its half-year results in July, Lloyds assumed that PPI claims would continue to come in at the rate of 190,000 a week. But in the run-up to the final deadline, they rose to between 600,000 and 800,000 a week.

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