Lloyds Banking Group Plc’s ex-chief executive officer said the firm’s payment protection insurance sales practices put it “on the side of the angels” even after setting aside $8.2 billion to redress missold products.
The majority of PPI products were sold correctly and represented “good value” to customers, Eric Daniels, who stepped down in February 2011, told the Parliamentary Commission on Banking Standards today. He said he was deeply regretful if any were improperly sold.
“We thought that with our consistent and constant dialogue with the regulators that we were on the side of the angels,” Daniels, 61, told the lawmakers in London. “We thought we were giving very good value to the customer.”
Lloyds has set aside more than any other U.K. bank to compensate clients who were forced to buy or didn’t know they had bought insurance to cover their repayments on mortgages, credit cards and other loans. Daniels had about 580,000 pounds ($899,000) of his 1.45 million-pound bonus for 2010 clawed back as a result of the PPI scandal, London-based Lloyds, the U.K.’s largest mortgage lender, said last year.
The “vast majority” of the provisions that have been made weren’t as a result of products being improperly sold and stemmed from differences in understanding between the regulators and the banks, Daniels said.
“That difference in understanding comes from what would constitute a reasonable sale at point of purchase and were representations made in addition to the written contract that would have been critical for the customer,” Daniels said. “We could not prove that those other representations had been made. That accounts for the great majority of the claims today.”
About half of all compensation claims were from people who hadn’t even taken out loans from Lloyds, Daniels said.