Customer redress costs for lenders surge to half a billion
Both HSBC and Lloyds Banking Group will spend a combined total of more than £500m on redress packages this year.
HSBC has spent around £230m on UK customer redress packages in the first half of 2017 and Lloyds has just committed to paying £280m as part of a redress scheme for mortgage customers in arrears.
Following recent talks with the FCA, Lloyds has committed to set up a redress scheme that will see £283m paid out to 590,000 customers charged fees, including litigation fees, when falling into mortgage arrears.
The bank acknowledged that when customers fell into arrears, it did not always do enough to understand customers’ circumstances to ensure payment plans were affordable and sustainable.
Lloyds will refund all fees charged to customers for arrears management and broken payment arrangements between 2009 and 2016.
Lloyds suspended arrears management fees back in January 2016. The FCA said the redress scheme will refund the accrued interest on all fees up to the remediation date or the date where customers had already paid the fees.
HSBC’s latest statement showed that the money spent on UK customer redress packages has increased nearly 10 times compared to the first half of last year, when the cost of such packages was around £25m.
However, the results statement does not give a specific reason for the increase