Lloyds Banking Group has announced that it is settling its outstanding payment protection insurance claims tipping the bank into a loss of £3.47bn for the first quarter of 2011.
The group’s interim management statement, issued this morning, said that it is making provision of £3.2bn for PPI mis-selling claims following discussions with the FSA.
The Lloyd’s announcement follows last month’s High Court ruling dismissing a judicial review by the British Bankers Association of new FSA rules governing PPI mis-selling.
Under the new rules, companies which have mis-sold PPI will have to go back to all customers who they have sold such policies to.
Lloyds announced last year that it was freezing the processing of new PPI claims pending the outcome of the BBA judicial review.
The statement says: “The Group has concluded that there are certain circumstances where customer contact and or redress will be appropriate. Accordingly the Group has made a provision of £3,200 million in respect of the anticipated costs of such contact and/or redress, including administration expenses.”
Before providing for PPI compensation and other one-off items, the bank said it had made a profit in the quarter of £284m.
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