Lloyds Banking Group forced to admit 'issues' with its PPI complaints procedure after claims it told staff to ignore possible fraud

Investigation claims trainees were told to turn a blind eye on the assumption that bank never mis-sold PPI

A Times investigation claims that contractors employed at the group's largest PPI complaint handling centre at Royal Mint Court in London were coached on how to forge information on customers' loan agreements (AFP/Getty Images)

Lloyds Banking Group has been forced to admit that complaints haven't been handled properly at a centre set up to deal with PPI mis-selling.

The group - which is 39 per cent owned by the taxpayer - was forced to comment after an undercover reporter got a job at the claims handling centre in the City of London and discovered staff had been taught to “play the system”.

The Times journalist was ordered to ignore possible fraud by Lloyds sales staff and told that most complainants would give up if rejected the first time.

The investigation also uncovered a document which openly concedes that Lloyds has lost some crucial customer evidence and that staff breached customers’ privacy under the Data Protection Act on some occasions. The report also suggests that the entire operation was based on the assumption that Lloyds’ salesmen never mis-sold PPI.

Lloyds said it believed that some of the comments made to the reporter were “isolated” and were now being addressed.

“Earlier this year we became aware of issues at a PPI complaints handling centre called Royal Mint Court in central London,” Lloyds said in a statement.

“This site was operated for us by a third party supplier, Deloitte. Following further investigations we took immediate action, and in May concluded our contract with Deloitte and moved to a new supplier.”

Payment protection insurance was flogged by Lloyds and other high street banks to millions of customers, many of whom didn't want it or couldn't ever claims.

The widespread misselling of the expansive and often useless cover has been the biggest financial scandal to hit mainstream banks.

Latest estimates suggest the compensation bill could top £15bn. Lloyds has so far paid out £4.3bn to 1.3 million customers who were victims of PPI misselling.