LONDON (Reuters) – Lloyds (LLOY.L) and Barclays (BARC.L) on Monday said a surge in late claims could see them pay out around $2 billion more each to settle Britain’s costliest consumer banking scandal, the mis-selling of payment protection insurance (PPI).
Lloyds on Monday said it will set aside up to an extra 1.8 billion pounds ($2.2 billion) to settle PPI claims, while Barclays (BARC.L) later said it would set aside between 1.2 billion pounds and 1.6 billion pounds.
Lloyds also said it was suspending its 2019 share buyback program.
The huge provisions show how banks in Britain are still battling with the legacy of the scandal, even after the Aug. 29 deadline for consumers to complain, as a rush of customer enquiries in the run-up to that date forced them to set aside more compensation money.
PPI policies were sold alongside a personal loan or mortgage to cover repayments if borrowers fell ill or lost jobs, but many were unsuitable.
Britain’s High Court in 2011 ruled that consumers could retroactively seek compensation for mis-sold policies.3