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.
It is absolutely appalling that Lloyds has not taken its commitment seriously to compensate customers. As a result consumers yet again have lost out on thousands of pounds that was rightfully theirs.
More top news
Clear, crisp & freezing cold with fresh falls of snow
A bid to hold a new inquest into the death of Stuart Lubbock - who was found dead in Michael Barrymore's swimming pool - has been blocked.
Scientists exploring the huge underwater labyrinth in Mexico have found remains suggesting it was once used by the Mayans.