Some Lloyds PPI compensation payments have made using a loophole known as “comparative redress” to avoid paying full redress according to BBC researchers.
The “comparative redress” loophole affects customers who were sold PPI with a single premium prior to the product being withdrawn in 2009. It has been alleged that the bank has been calculating Lloyds PPI compensation payments by taking the single premium paid and subtracting the cost of a comparative monthly premium insurance product – rather than repaying the full amount of PPI compensation due to customers.
The “comparative redress” method being used in some Lloyds PPI compensation payments assumes that the customer would have purchased the monthly premium insurance product at the time they were accepted for a credit arrangement. It has been estimated that the savings made by the bank by underpaying Lloyds PPI compensation payments run into tens of millions of pounds.
Calling the “comparative redress” method of calculating Lloyds PPI compensation payments “a scandal within a scandal”, the BBC reports that single premium PPI was already acknowledged as being unfair to consumers in 2005; but, whereas many credit providers started selling monthly premium insurance policies, the Lloyds Banking Group continued to sell the single premium insurance product until 2009 – often adding the cost of the single premium onto the amount of the credit agreement in order that interest could be charged on it.
A spokesman from the Lloyds Banking Group denied that the calculation methods used to work out Lloyds PPI compensation payments were inaccurate, and explained that customers chose to purchase single premium PPI because that was the only insurance product available at the time. He claimed that, had a monthly premium PPI insurance product been available at the time, customers would probably have chosen the cheaper option.
Customers who have received Lloyds PPI compensation payments are invited to contact our financial claims advice department so that their compensation payments can be checked and a claim for the balance submitted if necessary.
It is not yet known whether credit providers other than the Lloyds Banking Group are using this practice to underpay PPI compensation payments, and customers from any bank or credit provider are welcome to contact us with any queries about the PPI compensation payments they have received.Read More