In the face of sustained industry pressure, the Lloyds Banking Group has taken the bold decision to stop selling Payment Protection Insurance altogether. The move will come into effect on August 1st.

 

Lloyds made the following statement. This move reflects the uncertainty around the regulation of PPI sales and processes. The Group believes further changes in regulation will make it uneconomic to continue to offer these products in their current form.

 

The key word here is uneconomic. While banks have made a healthy profit for some time, the barrage of criticism driven by the media and consumer groups has galvanized many customers to reclaim their Insurance back. While reimbursing some customers with their Payment Protection Insurance is not ideal, worse still is the amount of time and money needed to manage the complaints.

 

The Lloyds Banking Group is a major player in retail banking with a roster of high street names under their banner. With the Competition Commission due to enforce new rules in how Payment Protection Insurance is sold by lenders, it will be very interesting to see how other banking firms respond.