Lloyds Banking Group has set aside an extra £1.4 billion to cover payment protection insurance (PPI) mis-selling claims, financial figures released today reveal.
It takes Lloyds' overall provision to £13.4 billion, although it says a further £3 billion may need to be added to its provisions if there isn't a significant decrease in PPI complaints over the next 18 months. However, Lloyds states that £2.2 billion of the £13.4 billion set aside so far remains "unutilised".
It claims the problem is that while the volume of PPI complaints it received fell by 8% compared to the first half of 2014, they were falling at a slower rate than expected.
Lloyds adds that most PPI complaints it sees are driven by Claims Management Company (CMC) activity. See MoneySavingExpert.com's Reclaim PPI for free guide to reclaim £1,000s for mis-selling yourself, you don't need to use a CMC.
Chief executive, Antonio Horta-Osorio, says: "We are disappointed to announce further provisions today, but we do so from a position of financial and capital strength".
Lloyds was slammed with a record £117m fine in June for its failings and conduct in handling claims over PPI. See the Lloyds PPI fine MSE News story for more information.
£20 billion has been paid out since January 2011 by the firms that make up the vast majority of PPI complaints, according to the latest statistics from regulator the Financial Conduct Authority.
In other news Lloyds has set aside £175 million for complaints over the mis-selling of packaged bank accounts – products where customers pay a fee in exchange for benefits. See MoneySavingExpert.com's Reclaim Packaged Accounts guide to see if you can get £100s back over mis-sold packaged accounts.
But despite setting aside cash for PPI and packaged bank account mis-selling, the banking group has still revealed a 38% rise in pre-tax profits to £1.19 billion, for the first half of the year.