Lloyds Banking Group plc (LON:LLOY) has set aside a further £350mln to cover claims for mis-sold payment protection insurance (PPI) after the financial regulator moved its deadline for new complaints.
The Financial Conduct Authority last week announced it was moving its cut-off date for new PPI complaints to August 2019 from a previous deadline of June 2019.
“Putting in place a deadline and campaign will mean people who were potentially mis-sold PPI will be prompted to take action rather than put it off,” said Andrew Bailey, chief executive of the FCA.
The further provision Lloyds has put aside to cover the extra two months will be included in the lender’s first quarter results.
The FCA’s announcement follows a Supreme Court decision in November 2014, which extended the definition of mis-selling for PPI.
In the case – known as the Plevin decision – the court ruled that if a PPI seller failed to disclose to a customer that it had received a large commission from the product provider, the sale was unfair under the 1974 Consumer Credit Act.
The FCA said compensation on PPI claims will be calculated if commission of more than 50% was paid.
The bank’s announcement comes a just over two weeks after Lloyds reported its highest full-year profit in a decade as it cut PPI provisions to £1.0mln from £4.0mln.
Statutory pre-tax profit was £4.2bn in the year to 31 December 2016, more than double the £1.6bn recorded a year earlier.
Shares in Lloyds rose 0.58% to 68.94p in afternoon trading.