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Lloyds Banking Group Ppi Bill Rises By Another £1.8Bn

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http://www.bbc.co.uk/news/uk-26013427

Lloyds Banking Group says it is increasing its provision for the mis-selling of payment protection insurance (PPI) by another £1.8bn, bringing the total to nearly £10bn.

But it also said underlying profits for 2013 would be £6.2bn - nearly double what analysts have been expecting.

The increased provision reflected a greater number of successful complaints, the bank said.

In October, Lloyds increased its PPI provision by another £750m.

The free economic boost continues, pity no one is gathering figures on what this returned money is being spent on and what proportion are using it as a deposit to take out a loan for a high value item such as a car.

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I will look later but suspect that their net interest margin is massive (primarily low savings rate). Interesting in that article they expect to give cash dividends out in 2014. Fair enough but if there is a financial crisis in future they should go to market for capital. They can't go to the UK gov!

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"Lloyds Banking Group says it is increasing its provision for the mis-selling of payment protection insurance (PPI) by another £1.8bn, bringing the total to nearly £10bn."

I've told a little story on here before, one more time won't hurt....

A friend worked at Lloyds doing personal loans. His targets were just sales based, it didn't make any difference to him whether the loans were ever repaid or not. (That affected another departments figures)

He would get the customer a loan on condition they took out PPI. It would start out as a loan of say £1000, with £250 in PPI charges. Kerching, double commission number one. (PPI commissions better than loan commissions).

A few months later, as expected, the customer would come back in some financial trouble and was unable to repay. No problem , have another loan as long as you take out PPI. Kerching, double commission number two.

This could be repeated three or four times, each time generating commissions but no liability for the salesman.

Now that could be dodgy enough but it gets worse. He is now lowering his sales deliberately, aiming for voluntary redundancy and then set up as an independent financial advisor. The main point is that he will go through his old customer list and get them to claim the PPI refund. The bank would then ask for his side of the story (without knowing he is working for the customer) which he could then manipulate to ensure that the claim would be paid out.

Kerching, salesman gets yet another % commission from the customer this time.

It's no surprise that the customers want free money.

It's no surprise the salesman follows the incentive schemes.

It it still a surprise to me how effing clueless the banks were.

Yet the taxpayers still get to pick up the bill.

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The credit impulse from HtB must clearly be waning if Osborne is having to goose the GDP number with even more PPI. It's the stealth fiscal stimulus that keeps on giving!

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"Lloyds Banking Group says it is increasing its provision for the mis-selling of payment protection insurance (PPI) by another £1.8bn, bringing the total to nearly £10bn."

I've told a little story on here before, one more time won't hurt....

A friend worked at Lloyds doing personal loans. His targets were just sales based, it didn't make any difference to him whether the loans were ever repaid or not. (That affected another departments figures)

He would get the customer a loan on condition they took out PPI. It would start out as a loan of say £1000, with £250 in PPI charges. Kerching, double commission number one. (PPI commissions better than loan commissions).

A few months later, as expected, the customer would come back in some financial trouble and was unable to repay. No problem , have another loan as long as you take out PPI. Kerching, double commission number two.

This could be repeated three or four times, each time generating commissions but no liability for the salesman.

Now that could be dodgy enough but it gets worse. He is now lowering his sales deliberately, aiming for voluntary redundancy and then set up as an independent financial advisor. The main point is that he will go through his old customer list and get them to claim the PPI refund. The bank would then ask for his side of the story (without knowing he is working for the customer) which he could then manipulate to ensure that the claim would be paid out.

Kerching, salesman gets yet another % commission from the customer this time.

It's no surprise that the customers want free money.

It's no surprise the salesman follows the incentive schemes.

It it still a surprise to me how effing clueless the banks were.

Yet the taxpayers still get to pick up the bill.

Crikey. That's really risky ! A complete breach of the data protection laws to take data from an ex employee like that. It will be quite obvious to lloyds when loads of loans written by one employee suddenly have ppi claims against them.

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Crikey. That's really risky ! A complete breach of the data protection laws to take data from an ex employee like that. It will be quite obvious to lloyds when loads of loans written by one employee suddenly have ppi claims against them.

He has little chance of being identified I'd have thought, or what I mean is that there is little chance of action being taken.

There are law firms who were involved in conveyancing who have moved into PPI redress as the documentation associated with the disbursements shows PPI premiums being added. They have clearly been going through their old customer books, as the loan documentation shows the same letterheads as the firm now complaining about the PPI policy.

Mostly these were right to buy to subprime customers, the RTB discount meant that no one cared if the loan was repaid or not as a healthy amount of equity was there to start with and the loan firm would easily recoup their charges upon repossession. These were also prime targets for PPI for the same reason- a single premium policy is a good way of diverting some of the RTB equity to a financial firm.

Edit to add, I've mentioned a particular case before. A couple in council accommodation, apply for a mortgage via RTB, mortgage firm asks council for reference regarding rent payments, council provide reference to stats they are £800+ in arrears on a repayment of £120 ish (so 7 months in arrears) and that payments are made erratictly, in part, or not at all. RTB loan is approved regardless, repossessed in 18 months and back into council accommodation.

Edited by The Knimbies who say no

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Crikey. That's really risky ! A complete breach of the data protection laws to take data from an ex employee like that. It will be quite obvious to lloyds when loads of loans written by one employee suddenly have ppi claims against them.

It's a strange situation.. if you set yourself up as an IFA you have to be careful of a wide range of regulations around conflicts of interest, data protection, advice vs. sales only, etc..

Whereas if you are a large bank then none of this seems to apply.

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