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Lloyds sets aside another £700m for PPI insurance claims Lloyds sets aside another £700m for PPI insurance claims
(35 minutes later)
Lloyds Banking Group says it has set aside another £1bn for personal protection insurance claims (PPI), £700m more than it was planning to. Lloyds Banking Group has set aside another £1bn to cover the cost of insurance mis-selling and the treatment of mortgage customers.
It said the extra provision would cover "reactive claims" of about 9,000 per week through to August 2019. Another £700m will cover payment protection insurance (PPI) claims and £283m will be used to repay about 590,000 mortgage holders.
It has also set aside £540m to cover packaged bank accounts and mortgage arrears handling. It came as Lloyds posted half-year pre-tax profits of £2.5bn, 4% higher than last year.
It estimates it will have to pay £283m to repay 590,000 mortgage customers mistakenly charged from 2009 to 2016. The results are the first since the government sold its stake in the bank.
The bank says it will repay this because of the way in which it applied policies relating to financial difficulty assessments. The repayment to mortgage customers comes after they were mistakenly charged from 2009 to 2016 after going into arrears.
The Group is also currently undertaking a review of the HBOS Reading fraud. The Financial Conduct Authority had been investigating the issue, concluding that the bank did not always do enough to understand customers' circumstances.
It is in the process of paying compensation to the victims of the fraud, for which it set aside £100m in the first quarter. Including the latest update from Lloyds, UK lenders have been forced to set aside more than £30bn to cover PPI compensation costs.
The announcement came as the bank reported half-year profits of £2.5bn, its biggest in eight years and 4% higher than a year ago. PPI became controversial after it was revealed that many customers had been sold it without understanding that the cost was being added to their loan repayments.
They are its first set of results since returning to private ownership in May. The government had been steadily offloading its Lloyds stake, resulting in about £21bn being returned to the taxpayer.
The government bailed out Lloyds following the 2008 financial crisis at a cost of about £20bn.
The government still owns 73% of Royal Bank of Scotland, which was rescued with £45.5bn of taxpayers' cash during the crisis in the world's biggest bank bailout.