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Lloyds Bank under fire over PPI legal loophole


A financial loophole allegedly used by Lloyds Banking Group, has allowed tens of millions of pounds to be short-changed from PPI claimants.

A recent investigation revealed a little-known regulatory provision known as ‘alternative redress’ has been adopted by the bank, assuming those affected by PPI would have bought a cheaper policy instead.

Most recently, Lloyds banking group were fined £4.3 million for mishandling complaints facing severe backlash from consumers, with one horrified expert labelling the revelation as a "scandal coming out of a scandal’’.

The BBC investigation proposed that alternative redress had been used in as many as 25% of claims in some months, after figures from the Professional Financial Claims Association (PCFA) were investigated.

Lloyds denied the claims, announcing the unrepresentative numbers alleged were ‘’incorrect and deeply misleading’’ and held that alternative – or comparative - redress has only been used in a mere 5% of cases since it was introduced last February.

The bank reinforced the importance of strict regulations involving PPI claims, stating ‘’The FCA (Financial Conduct Authority) handbook is very clear that in these specific circumstances, the provider should give redress that puts the customer in the position they would have been in had the customer taken the regular premium policy”.

Controversial single premium PPI was banned from October 2010, and those that have been wrongly offered alternative redress are advised to contact their banks immediately.

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