Lloyds hit by further charge for insurance mis-selling

Europe’s second-biggest bank by market value reported an underlying profit of £2bn in the third-quarter, down from £2.2bn a year ago and slightly below market expectations.

The bank reported third quarter statutory pretax profit, including one-off items, of £958m, up from £751m.

Britain’s financial regulator said in October that it intended to set a 2018 deadline for people to claim compensation for mis-sold loan insurance or payment protection insurance, a decision that was seen as positive for Lloyds.

Over the last five years banks have already set aside more than £28bn to meet compensation claims from borrowers sold payment protection insurance (PPI).

The policies, designed to protect borrowers in the event of sickness or unemployment, were found to have often been sold to people who would have been ineligible to claim.

Lloyds was rescued by a £20.5bn taxpayer-funded rescue during the 2007-09 financial crisis, leaving the Government holding a 43 per cent stake. It has since reduced its holding to under 11 per cent, raising over £15bn.