Helen Weir tells parliamentary commission sales of payment protection insurance had subsidised bad unsecured loans
The former head of Lloyds Banking group’s retail division has apologised for the mis-selling of payment protection insurance and said she regrets the damage it has caused the banking industry.
Helen Weir who headed the bank’s retail arm between 2008 and 2010, after four years as Lloyds’ chief financial officer, told MPs she was sorry for her part in the operation, in which millions of customers were sold useless insurance policies alongside credit cards and loans.
Weir, who is now the finance director at John Lewis, told the Parliamentary Commission on Banking Standards: “I acknowledge the mis-selling of PPI across the industry and at Lloyds and apologise wholeheartedly for my part in that.”
Weir admitted sales of the insurance had subsidised loss-making unsecured loans, but told the committee she had acted in good faith, and believed PPI was a good product.
“What I am very clear about, both from research and from listening to customers is that this was a product that met very important financial needs for customers who wanted peace of mind were they to fall into difficulty.”
She added: “on a number of occasions customers would say they wanted this product”.
Last November, Lloyds said it had set aside a further £1bn to cover compensation for customers who were mis-sold PPI bringing the bank’s total compensation bill to £5.3bn so far. The extra provision pushed Lloyds into a loss of £144m for the third quarter of the year.
Lloyds chief executive Antonio Horta-Osorio warned at the time that the eventual final bill for PPI was still uncertain, suggesting that it may rise further.
Giving evidence alongside other former Lloyds executives, Weir said the scandal had caused a breakdown in trust among customers and damaged the banks’ relationship with the regulator, which she regretted.
PPI was sold by banks for years on the basis that policies would meet a borrower’s repayments if they became ill or lost their job, but after a string of failed claims by consumers the Financial Services Authority cracked down on sales and forced lenders to compensate those who had been mis-sold the cover.
In February 2012 Lloyds became the fist British bank to exercise a “clawback” option on executive pay. Eric Daniels, Lloyds former chief executive, had to forfeit 40% of his £1.45m 2010 award, equivalent to £580,000. Four other executive directors – including Helen Weir – lost 25% of their bonuses, amounting in her case to a loss of £218,000.
The committee heard that Lloyds Banking Group had recorded a rapid growth in sales of PPI , rising from 2m policies in 2001 to peak at sales of 3m a year by 2003.
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