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Bank admits PPI complaints 'issues'

Lloyds Banking Group has admitted "issues" with the handling of customers' payment protection insurance (PPI) complaints, after an investigation allegedly found staff were told to ignore possible fraud.

An investigation by The Times claimed contractors employed at the group's largest PPI complaint handling centre at Royal Mint Court in London were coached on how to forge information on customers' loan agreements and advised that most customers would drop their complaint if rejected the first time.

The newspaper sent an undercover reporter through the training system where they were allegedly told to effectively turn a blind eye to the risk of fraud, on the assumption that Lloyds' salesmen never mis-sold PPI.

A spokesman for Lloyds Banking Group said that last month it terminated its contract with Deloitte, which operated the complaint handling centre on its behalf.

"Earlier this year we became aware of issues at a PPI complaints handling centre called Royal Mint Court in central London, " the spokesman said. "This site was operated for us by a third party supplier, Deloitte. Following further investigations, we took immediate action, and in May concluded our contract with Deloitte and moved to a new supplier.

"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. 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."

PPI covers repayments on credit cards and loans if the holder loses his or her job or is unable to work due to an accident or illness. To date Lloyds Banking Group has set aside a total of £6.7 billion for PPI redress and paid out more than £4.3 billion to 1.3 million customers.

City regulator the Financial Conduct Authority (FCA) said it is aware of the issues raised by The Times and it has been working with Lloyds since earlier this year to ensure they are resolved and customers' interests are properly considered.

The FCA has previously said that it was looking into PPI firms' complaint-handling procedures and it plans to publish its findings later this summer. A statement from the FCA said: "We expect all firms to comply with our rules and treat their customers fairly. Firms know that PPI complaints must be thoroughly investigated and that appropriate action, where required, is taken promptly."

PPI is the most complained-about product the Financial Ombudsman Service, which resolves disputes between consumers and financial firms, has ever seen. It has criticised banks and insurers for subjecting customers to ''delays and inconvenience'' and has had to deal with record numbers of complaints over the last year, which have mainly been driven by the PPI scandal.

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