Lloyds Using Loopholes to Cut Consumer PPI Refund Amounts

The PFCA, a trade body that represents claims management companies, accused Lloyds of “short-changing” consumers by exploiting a legal loophole that saved millions of pounds in redresses. 

Lloyds cites a regulatory provision called “alternative redress”, which allows them to assume the customers who were mis sold PPI had purchased a cheaper, regular premium PPI policy. Single premium PPIs cost more than regular premiums, which makes all the difference in the compensation consumers receive.

The PFCA said that despite Lloyds using the loophole, most consumers were satisfied with the PPI refund they receive.

PPI Expert Cliff D’Arcy said that Lloyds had saved more than £60 million in redresses the previous year. He said “Frankly, I’m amazed that this problem has existed throughout the last year and hasn’t emerged into the light.”

Some consumers who had received their PPI refund had revealed that the banks have treated the mis sold financial product into a regular-premium PPI policy. When referred to the Financial Ombudsman, consumers found that Lloyds owed them an additional £500-1,000.

The survey undertaken by the PFCA revealed that Lloyds had been exploiting the legal loophole since February 2013, with 25% of PPI refund offers from the bank using the regulatory provision.

D’Arcy described it as a “scandal coming out of a scandal.”

Gaining Complete PPI Compensation From a PPI Claim

PPI or payment protection insurance makes up about 92% of the Financial Ombudsman’s workload and is the biggest financial scandal in the United Kingdom to date. PPI is designed to repay your loans, mortgages and credit cards in case you get sick or get into an accident, but because of the unfair sales tactics of banks and lenders, many people were mis sold the insurance policy. Here are a few steps to regain your complete compensation from a PPI complaint.

1.    Determine if You Have PPI

Call your bank or lender and ask if you have any form of insurance with your current financing. Determine if it is payment protection insurance; any kind of PPI will repay your loan. It might be called mortgage payment protection, credit protection or accident, sickness and unemployment (ASU) insurance.

2.    Mis Selling

Recall how your bank or lender sold you the insurance policy. If they stopped you from processing your loan requirements if you did not get the PPI, you can consider it as a mis sold PPI. Insurance policies cannot be requirements because of their exceptions.

3.    Making a Call or Sending a Letter

Make a call or send a letter to your bank regarding your PPIclaim and how you believe you are mis sold the insurance policy. Include in your complaint how the bank or lender’s representative mis sold the insurance policy. Bank call centres could only process your claim if your reason is valid and if you are truly ineligible for the insurance policy.

4.    PPI Claims Company

A reputable PPI claim company could help you in case the bank rejects your claim and you do not have time to process the claim with the Financial Ombudsman. PPI claims companies work on a no win no fee basis making them virtually risk-free.