Lloyds Bank has claimed that fraudulent claims for refunds of Payment Protection Insurance are widespread and blamed claims management companies.
As with other major banks, Lloyds is dealing with millions of complaints from customers who say they were either sold PPI that was of little or no use for their circumstances, or that they were tricked into taking the insurance, which is intended to plug the shortfall in repaying a loan if a person loses their income.
Lloyds has revealed that 45 percent of all the claims it received in February and March came via claims management companies. Using such companies, which charge a fee, is not mandatory when making a claim.
According to Lloyds, of the claims made through companies, one-third involved products where payment protection insurance isn't on offer. Meanwhile a quarter of the claims were on behalf of people who didn't have a product from a Lloyds-owned company. (There is some overlap between these two groups of claims.)
Despite the alleged fraud, Lloyds has increased the amount of money it has put aside in accounts to pay compensation by £375 million to £3.6 billion. That move has been mirrored by Barclays and is likely to be replicated by Royal Bank of Scotland.