One quarter of Lloyds PPI claims are 'fraudulent'

Twenty five percent of payment protection insurance (PPI) compensation claims submitted by firms were from people who didn’t have any Lloyds Bank products.

The bailed-out bank has increased its provision for mis-selling PPI by 12% to £3.6bn.

And Lloyds chief executive Antonio Horta-Osorio has hit out at fraudulent PPI claims, according to a report in The Guardian.

“We have to stop this,” he said. “It’s fraud.”

Horta-Osorio said the £375m additional provision was a “minor adjustment” and criticised the claims management firms that submitted 45% of the claims the bank received in February and March from customers who typically bought the insurance when taking out a loan as cover for illness and other hindrances to paying it back.

He didn’t rule out further increases to the PPI provision.

Barclays added £300m to its £1bn provision last week and the Royal Bank of Scotland is expected to increase its £1bn PPI provision on Friday.

In a separate report, it was revealed that the lawyers, accountants and businessmen behind the PPI claims industry stand to make as much as £2bn of the £8bn in compensation expected to be paid out by banks and credit card companies to individuals who have been mis-sold insurance.

The Ministry of Justice said that 897 firms had now been granted licences to offer PPI compensation services.

Since setting up a compliance team to investigate complaints against claims management companies, the MoJ has carried out 50 audits and issued 7 warnings.