- 4 updates
Citizens Advice says consumers could be thousands of pounds out of pocket, and even more distrustful of banks, because of Lloyds rejecting PPI claims first time.
An investigation by The Times found staff at a Lloyds PPI complaints handling centre were advised that most customers would give up if the claim was not successful first time. Lloyds has since terminated the contract of the company responsible for running the claims unit and is retraining staff.
Citizens Advice Chief Executive Gillian Guy said: “The scale of PPI mis-selling was of pandemic proportions.
City regulator the Financial Conduct Authority has warned firms to comply with its rules and treat customers fairly.
It comes after Lloyds Banking Group admitted "issues" with the handling of customers' payment protection insurance complaints.
The FCA has previously said that it was looking into PPI firms' complaint-handling procedures and it plans to publish its findings later this summer.
An FCA statement said: "We expect all firms to comply with our rules and treat their customers fairly.
The FCA said it is aware of the issues raised by TheTimes and it has been working with Lloyds since earlier this year to ensure they are resolved and customers' interests are properly considered.
Lloyds Banking Group said they took "immediate action" after becoming aware of "issues" at their PPI complaints handling centre, run by supplier Deloitte.
A spokesman said the centre is now being run by a new supplier, and staff are undergoing re-training.
To date Lloyds has set aside a total £6.7 billion for PPI payouts, and has paid out more than £4.3 billion to 1.3 million customers.
Lloyds Banking Group has admitted "issues" with the handling of customers' payment protection insurance (PPI) complaints, following allegations that staff were told to ignore possible fraud.
An investigation by The Times claimed that contractors employed at the group's PPI complaint handling centre were coached on how to forge information and advised that most customers would drop their complaint if rejected the first time.
The newspaper sent an undercover reported to train with the company as a PPI complaint handler.
A spokesman for Lloyds said the company has terminated its contract with Deloitte, which operated the complaint handling centre on its behalf:
"Earlier this year we became aware of issues at a PPI complaints handling centre called Royal Mint Court in central London."