Lloyds admits flaws in PPI complaints handling

LONDON Tue Jun 11, 2013 10:28am BST

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LONDON (Reuters) - Lloyds Banking Group said it had ended a contract with Deloitte after problems were uncovered in the way a call centre operated by the business services firm handled customer complaints about mis-sold loan insurance.

The news followed a report by The Times, which said it had found contractors employed at Lloyds' largest complaint handling unit were taught how to play the system to the detriment of clients.

Lloyds said on Tuesday it had ended a contract with Deloitte in May after becoming aware of "issues" at the call centre in London, which deals with complaints about the mis-selling of payment protection insurance (PPI) to Lloyds customers.

Lloyds has set aside 6.8 billion pounds to compensate customers mis-sold PPI, more than any other bank, having sold more policies than rivals. PPI policies were meant to protect borrowers against sickness or redundancy but were often sold to customers who didn't want or need them.

An undercover Times reporter training to be a PPI complaint handler was reportedly told by trainers that some bank salesman had faked PPI information in agreements on loan sales and that complaint handlers had been told to effectively turn a blind eye.

"Some of the comments made by trainers to the Times reporter are not endorsed by Lloyds Banking Group and we believe they do not reflect our high training standards or our policies," Lloyds said in a statement on Tuesday.

"We believe the comments to be isolated and they are now being addressed. Following the discovery of these issues and under the guidance of a new supplier the employees are currently undergoing re-training in line with our policies and procedures," the bank said.

In a statement, Deloitte said its role had been to process PPI mis-selling complaints in accordance with the bank's policies and procedures.

"We cannot, however, comment upon the specifics of this matter due to reasons of client confidentiality," it said.

(Reporting by Matt Scuffham; Editing by Mark Potter)

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