Lloyds profits wiped out after surge in PPI claims

LLOYDS will this week reveal its profits were practically wiped out by a flood of claims for missold payment protection insurance (PPI) ahead of the deadline for customers seeking redress.

The bank is expected to reveal a £1.7 billion hit from missold PPI – eliminating most of the £2 billion it made in profits.

Analysts fear the figure could be even higher after RBS last week swung to a loss in the third quarter, having set aside £900 million for redress. Barclays set aside an extra £1.4 billion.

Lloyds said in July that it was getting 190,000 PPI claims each week.

But this rocketed to between 600,000 and 800,000 in the run-up to the claims deadline earlier this year on August 29.

Profits at Britain’s banks have tanked as hundreds of thousands of customers rushed to claim PPI repayments.

PPI was sold to cover customers if they were not able to meet repayments on loans, credit cards or mortgages. In some cases, people were not told the cover had been added to their loan contracts. Others were sold PPI even though they would never have been eligible to claim on the policy.

PPI providers paid out £36.4 billion in redress between January 2011 and July 2019, according to the Financial Conduct Authority.

Total monthly payouts jumped 27 per cent to £432.9 million between June and July this year – and it is thought the figures for August will spike again.

Economists have estimated that the end of payouts could trigger a 0.3 per cent decline in consumer spending.