'It was a misunderstanding': Former Lloyds boss denies widespread mis-selling of payment protection insurance policies


The former boss of Lloyds Bank this morning denied widespread mis-selling of payment protection insurance policies.

Eric Daniels told the Parliamentary Commission on Banking Standards that the multi-billion scandal was instead caused by a “misunderstanding” between banks and watchdogs. 

He described himself as “deeply regretful” for genuine mis-selling but said: “The vast majority (of PPI sales) are not related to that but to difference of understanding between industry and regulator.”

Lord McFall attacked the unrepentant former boss citing a series of warnings about PPI policies going back ten years. The Financial Ombudsman Service has found in favour of the consumer in 98 per cent of cases. 

“It would seem as if the whole world knew about PPI mis-selling and customers being ripped off but the board of Lloyds.  You were just going to go on and make your profits,” said the Labour peer. 

But Mr Daniels refused to give ground. He told the Commission: “I believe customers did know what they were buying. I think they got good value.

“When we priced PPI we built the product that was the most generous in the market. We gave a very competitive price for a very valuable product and I think customers enjoyed that,” he said. 

“There are a fair number of claims that were paid back that were not legitimate claims,” Daniels added. 

Daniels left Lloyds in 2011. He claimed that in the early days of the PPI review a large number of claims had simply been paid back to consumers “on an industrial scale” because that was easier.

Despite tough questioning Daniels said:  “I believe in the great majority of cases customers did receive a good sales product, received a product that fitted them and received a good outcome.” 

He denied that Lloyds’ pay structure incentivised PPI mis-sales although he admitted that staff received more points when they sold more.  

“The average salary of a member of branch staff who sold PPI was £20,000. The average bonus for those people was 10 to 15 per cent of that.  

“Lloyds is not an investment bank, we do not pay telephone number bonuses. We believe outsized bonuses can distort behaviours.”

He said he believed Lloyds’ set up “did not distort behaviours”. 

“Lloyds embraced treating customers fairly as a principle. Violating a customer’s trust is antithetical to building a business. We took extraordinary steps to ensuring our people were trained well,” said. 

Mr Daniels said loans did not offer customers a high return and even though that improved when a PPI police was added “it was still not a high return”. 

“We are looking at a point in time in a fairly partial fashion,” he said. “We were living in a very benign economic time. You would see the returns from that product go down at a time like now when unemployment is rising.” 

Suggested Topics
peopleFrankie Boyle responds to referendum result in characteristically offensive style
Arts and Entertainment
Highs and lows of the cast's careers since 2004
New Articles
i100... with this review
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Day In a Page

Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam