Lloyds Banking Group surprised the rest of the UK high street banks and the British Bankers Association (BBA) after making a dramatic U-turn and ceasing any legal battles with the FSA over mis-sold PPI claims and provisioning a massive £3.2bn to cover any compensation claims from its customers who feel they have been mis-sold the payment protection insurance.
New Lloyds chief António Horta-Osório took over running the bank from former boss Eric Daniels in March and signalled a truce with the city regulator over the seven-year PPI claims dispute. He advised “It is appropriate to take provision now and move on. It is the sensible, prudent and right thing to do”.
This shock decision has put pressure on other UK banks to follow suit and withdraw their legal action. Rivals Barclays, HSBC and the Royal Bank of Scotland are due to report today on what they decide are the next step for them.
It is clear to see that the legal battle between the BBA and FSA is slipping in favour of the FSA, and this decision by Lloyds to draw a line and cost up a proactive and fair reimbursement strategy is only adding weight against the other banks to do the same.