Lloyds accused of PPI claims scam

A journalist working for The Times was told that some bank salesmen had faked information on agreements and that complaints handlers should effectively turn a blind eye to the risk of fraud.

The majority of customers would give up chasing a PPI complaint if the bank rejected it the first time around, the reporter was told.

As Lloyds admitted there had been “issues” at an outsourced complaints handling centre, Martin Lewis, founder of website MoneySavingExpert, said customers who have had their PPI compensation claims turned down by the bank should either take their complaint to the free Financial Ombudsman Service (FOS), which resolves disputes between consumers and financial firms, or re-submit their grievance to the bank.

Mr Lewis said: “If Lloyds have turned you down, you need to fight if you feel you have been mis-sold, certainly ignore a Lloyds rejection.

“A rejection is being rejected by the ombudsman, it is not being rejected by the bank – that is part of the dance.”

Mr Lewis said he had received several tweets from Lloyds customers saying their claims had initially been rejected by the bank and they had later gone on to win compensation.

In one message, a claimant said they had ended up with a payout of more than £4,000.

Yesterday’s disclosures came as the new regulator – the Financial Conduct Authority (FCA) – prepares to release a report on PPI firms’ complaint-handling procedures that is due to be published later this summer.

The FCA said it is aware of the issues raised and it has been working with Lloyds to ensure they are resolved.

A statement from the FCA said: “We expect all firms to comply with our rules and treat their customers fairly.

“Firms know that PPI complaints must be thoroughly investigated and that appropriate action, where required, is taken promptly.

“Our rules are very clear that firms are expected to learn from previous complaints. So if there are significant numbers of complaints coming in about the same thing, that is a clear warning sign that something isn’t right.”

More than £16bn has been put aside so far by the industry to deal with PPI mis-selling, in what is the most complained-about product that the ombudsman has ever seen.

The Times’ investigation centred around contractors employed at the group’s largest PPI complaint handling centre at Royal Mint Court in London.

The newspaper sent an undercover reporter through the training system. One recruitment executive reportedly said that some bank salesmen had ticked blank opt-in boxes on loan agreements, in order to add PPI onto loans, regardless of whether the customer wanted it.

The executive allegedly went on to say that complaints handlers should treat all PPI applications as though they were genuinely completed by the customer.

Lloyds Banking Group said that last month it terminated its contract with Deloitte, which operated the complaint handling centre on its behalf.

Citizens Advice chief executive Gillian Guy described the findings as “absolutely appalling” and said they will compound consumers’ mistrust in banks.

Richard Lloyd, executive director of Which?, said the investigation casts doubt on banks’ claims that they are cleaning up their own act.