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| Lloyds Banking Group raises PPI bill by a further £1bn | |
| (35 minutes later) | |
| Lloyds Banking Group has set aside a further £1bn to cover compensation for customers who were mis-sold payment protection insurance (PPI). | |
| It brings the bank's PPI bill to £5.275bn so far. | It brings the bank's PPI bill to £5.275bn so far. |
| The further provision means Lloyds has been pushed into a loss of £144m for the third quarter of the year. | The further provision means Lloyds has been pushed into a loss of £144m for the third quarter of the year. |
| After Barclays' recent decision to set aside a further £700m for PPI compensation, the banking industry's bill now stands at just over £11bn. | After Barclays' recent decision to set aside a further £700m for PPI compensation, the banking industry's bill now stands at just over £11bn. |
| Lloyds described the further PPI provision as a disappointing "legacy issue". | |
| But the cost of compensating customers is rising fast as complaints from aggrieved customers continue to pour in. | |
| The Financial Ombudsman Service, which handles grievances that banks reject, has now received half a million complaints from disgruntled people who claim they have been unfairly denied any compensation. | |
| PPI was widely sold by banks in the last decade, ostensibly so that mortgage and credit card borrowers would be able to repay their loans of they fell ill or lost their jobs. | |
| In fact, it became increasingly apparent that many customers had been mis-sold the insurance because they either did not need it in the first place, or would have been automatically excluded from making a valid claim, typically because they were self-employed. | |
| Under instruction from the financial authorities, the industry is now going back through past sales and alerting customers to the possibility that they can now make a claim for compensation - a process which is generating a huge bill for the UK's banks. |