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Lloyds defies FSA guidance on redressing mis-sold policies grievances

Lloyds will put the process "on hold" while the FSA reviews its standards, in defiance of the FSA.

The Lloyds Banking Group has announced that it would put on hold the process of redressing customer grievances about mis-sold Payment Protection Insurance (PPI) policies until a legal tussle over the issue has been resolved, the Times reports.

The move defies the Financial Services Authority's guidance issued last week that banks should handle customer complaints as normal while a review of the regulator's standards was in progress.

A review was sought by the British Bankers' Association of FSA's standards to be enforced in December that would require banks to more rigorously address complaints related to PPI policies.

The move by Lloyds - which has received more customer complaints than any other lender in the first half of this year - means that customers would have to wait up to nine months before having their complaints addressed, notes the Times.

Most of the 22,420 complaints against Lloyds during the six months to 30 June are thought to be PPI related cases.