Lloyds Banking Group has taken a near £1 billion hit after revealing it would refund customers for failures in its handling of mortgage arrears policies and set aside extra cash to address the mis-selling of payment protection insurance (PPI).
The lender has estimated it will have to shell out £283 million to repay approximately 590,000 mortgage customers who were mistakenly charged between 2009 and 2016 because of the way Lloyds applied policies relating to financial difficulty assessments.
That is on top of £700 million put aside to deal with PPI claims.
It comes just months after Lloyds forked out an extra £350 million to cover the ballooning cost of the PPI mis-selling scandal, which has now reached over £18 billion.
The additional provisions are set to cover around 9,000 PPI claims per week through to the deadline set at the end of August 2019, following a higher number of complaints over the past three quarters.
The bank had previously made provision for around 7,700 weekly complaints.
“We also announced today that we will be reimbursing fees to mortgage customers who had fallen into mortgage arrears where the bank had not applied a consistent approach,” chief executive Antonio Horta-Osorio told reporters during a media conference call.
“The group will be proactively reimbursing all customers who incurred those fees, including those who may not have been impacted, in order to put things right as quickly as possible.”
The provisions were detailed in its half-year earnings, which showed a 4% rise in statutory pre-tax profits to £2.54 billion, while total income rose 4% to £9.27 billion in the six months to June 30.
It was the first set of results to be released by the bank since it was returned to private hands earlier this year.