Just in case the 10 members of the parliamentary banking standards commission – locked in talks over the fine details of their report – needed a reminder of the culture of the industry, along comes an exposé of the way Lloyds Banking Group is handling claims for payment protection (badly).
The discovery by an undercover reporter of the way compensation claims are being handled by the 39%-taxpayer owned bank show that standards fall far short of acceptable levels. Call centre staff, subcontracted via Deloitte, were told to ignore the question of whether Lloyds salespeople informed customers they were being sold PPI. They were then instructed to reject as many claims as possible on the grounds that claimants would be unlikely to go to the ombudsman.
The discovery is embarrassing for the Lloyds chief executive, António Horta-Osório, who had actually appeared to be on the side of the angels when he swept into the bailed-out bank in 2011, called a truce with the regulators and began paying out on PPI claims.
Rival banks reluctantly followed, facing up to what has become the most expensive mis-selling scandal in financial history. The bill at Lloyds already stands at a staggering £6.8bn. The bank hoped it might have peaked, but the call by consumer body Which? on Tuesday for rejected Lloyds claimants to try again for compensation could now push it higher.
It is also embarrassing for Deloitte, which has insisted Lloyds did not mention any problems at the central London call centre when it terminated its contract last month. Lloyds, meanwhile, insists this is the reason the contract was ended. A compensation bill could land at Deloitte's door if this is the case.
Lloyds is disputing the way Deloitte implemented its Lighthouse Guide, which spells out its bank-wide policies on handling PPI. The bank does not dispute that begins with the premise that none of its PPI policies were mis-sold – even though it ends up paying out on 80% of claims.
Even before this episode, Lloyds had been fined £4.3m for delaying compensation payments to 140,000 customers and the new Financial Conduct Authority has warned that the way other firms are handling PPI claims is under review.
This scandal is far from over.
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