Lloyds TSB has been accused of wrongly rejecting genuine claims for mis-selling payment protection insurance.

Compensation is only being awarded to between 15% and 35%in figures seen by representatives of money saving expert. The bank, which has set aside £4.3 billion to pay claims, appears to be rejecting claims despite customers having genuine claims.

However, the bank’s own data shows in the first half of the year its Lloyds TSB brand sided with consumers in a much higher 81% of complaints about insurance, of which PPI made up a large percentage. Its sister brand Halifax upheld 74% of insurance complaints in that period.

The change of tact appears to show a hardening resolve to reject claims, despite the bank saying sorry in June 2011 for widespread PPI mis-selling over the past few years.

When complaints are then taken to the independent Financial Ombudsman Service, it sides with claimants in 98% of cases against Lloyds TSB and 90% against sister brands Bank of Scotland and Halifax, according to latest figures.

Where the Ombudsman awards compensation, it usually comes after a firm wrongly rejects an initial complaint.

Rejected claims

One claims management firm told MoneySavingExpert.com that Lloyds Banking Group had been awarding compensation to approximately 80% of its clients at the start of the year. But this figure had dropped to 20% in August.

Another unconnected firm says the uphold rate for its clients is now at about 35% where the claim is against Lloyds TSB, and 15% against Halifax.

It would appear that despite Lloyds accepted the wrongdoing it is not sticking to it’s obligations to compensate customers.

They have employed call centre’s abroad to deal with the calls and a number of customers have complained that it is clear the operator does not understand the process or the information the customer is giving them.

The latest tactic appears to be to speak to the client to pressure them by asking for unrealistic documentation. For example a copy of an employment contract from 10 years ago.

A Financial Services Authority spokesman says: “We keep a very close eye on how firms handle complaints to ensure customers are treated fairly.”

Latest Lloyds PPI storm

This is the latest storm to engulf the bank over the way it handles PPI claims.

Not content with flogging a product that was worthless to hundreds of thousands of customers, it made some claimants wait over 90 days once they have agreed to compensate the client.

As long well wrongly rejecting claims, Lloyds TSB has also been accused of failing to provide information in time for the Ombudsman to investigate claims.

When this happens, it usually results in a win for consumers.

How to reclaim your PPI

If you believe you have been mis-sold your ppi policy then simply complete our online form or call us on 01244 683222 using your free mobile minutes or on freephone 0800 612 4136.