Lloyds to lift cover for mis-selling

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The Independent Online

Lloyds TSB said it would most likely make further provisions to cover it for endowment mis-selling as it told shareholders that complaints from customers had increased in 2003.

The bank has already been slapped with one of the biggest fines in the industry over endowment mis-selling, after a ruling by the Financial Services Authority that its subsidiary, Abbey Life, had sold them in an inappropriate way to customers.

Lloyds said: "Whilst the group maintains provisions for redress to policyholders in respect of past sales, further provisions and charges will arise in 2003 to cover these issues." Lloyds was more upbeat about its record in mortgage lending and pension sales in the past few months.

It said mortgage lending rose in its first quarter and pensions sales were flat, defying tough conditions in both markets and outperforming some of its high street rivals.

The bank has also calmed fears about its dividend, one of the most generous in its sector, with most analysts now thinking it will not slash the payout when it announces its interim results. But Lloyds shares fell 6p to 452p.

The bank underlined plans that it might sell its subsidiary, The National Bank of New Zealand, which could bring in around £2.5bn to strengthen its capital ratios. Lloyds' net interest margin, a measure of banks' profitability, dropped to 3.05 per cent from 3.16 in the fourth quarter of 2002, after UK regulators forced banks to pay interest to small businesses.