Former Lloyds boss Eric Daniels has told MPs that 50% of mis-selling claims received by the bank related to payment protection insurance (PPI) were bogus, but a lot were paid out in the early days as staff struggled to handle the volume of claims.
Speaking before the Parliamentary Commission on Banking Standards he said that in the early days soon after banks lost their landmark court case which opened the door for customers to make claims over PPI mis-selling, it was not possible to sort through claims that were legit and those that were not, according to the Telegraph.
"I have heard that a fair amount of bogus claims have been paid out as the number of them was so overwhelming, staff could not tell if a claim was bogus or not in the timeframe set by the ombudsman.," he said.
"So a fair amount of claims paid out were not legitimate, certainly in the early days. I am not sure if it is still going on."
Daniels went on to say that roughly 50% of all claims made to Lloyds were bogus - from people who were never customers of the bank and never took out the product. He added that many of these could be easily identified as they came through in "template form".
However, he argued that when claims did arise from customers of Lloyds, it was not always possible to know if it was bogus or not, as the bank had the paperwork to prove that the customer had signed up to the product and that it had been explained to them in "clear English"
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