Lloyds banking ready to pay £300m for mortgage errors

LLOYDS Banking Group has set aside £300m to repay 600,000 customers for mortgage arrears errors that took place over a seven-year period, sources said.

The remediation programme is expected to be unveiled today, as Lloyds reports its interim results.

The Daily Telegraph understands that Lloyds expects to pay just under £300m back to customers, with a further £50m to cover administrative costs.

The errors are thought to relate to Lloyds’ mortgage arrears policies, specifically the way it conduced financial difficulty assessments between 2009 and 2016.

According to Sky News, which first reported the redress scheme, affected customers will be contacted by Lloyds, and could expected to receive around £350 on average in repaid feed and interests.

Lloyds declined to comment. Shares in Lloyds closed up 0.1pc yesterday.

In its results today, Lloyds is also expected to take another hit for payment protection insurance misselling.

The lender is expected to set aside an additional £400m for compensation, taking its total bill for the scandal to almost £18bn as it approaches the August 2019 deadline for aggrieved customers to file complaints over PPI.

The Financial Conduct Authority set the deadline in March, prompting Lloyds to book a £350m provision, though it now looks likely that Lloyds will have to set aside more funds as the volume of PPI claims has been higher than expected.

The report also comes less than a week after it emerged that only five victims of the £245m HBOS Reading fraud scandal had accepted compensation from Lloyds Banking Group, though the lender has made offers to 16 customers.

Lloyds had been looking to make offers of redress to all the 67 small firms that it had identified as having been damaged by the fraud at the end of June, but it had already missed that deadline.