There’s also the spectre of another potential mis-selling scandal, with its attendant costs, currently haunting Lloyds Banking Group PLC (ADR) (NYSE:LYG). This time it could be mis-selling of interest-only mortgages that hits the bank’s profitability. Whilst any claims may be less successful than in the case of PPI mis-selling — because mortgage documentation was generally informative about the responsibility of customers to make adequate provision to repay the loan — the value of individual claims could be very substantially higher, given the relative value of mortgages compared to PPI premiums.
And while it won’t have influenced anyone’s decision to sell last week, the news that Lloyds has admitted failings in its handling of PPI mis-selling complaints might not be terribly encouraging to prospective investors, as it suggests that the bank may not have put that particular problem quite as far behind it as investors might wish.
The article What You Were Selling Last Week: Lloyds Banking originally appeared on Fool.com and is written by Jon Wallis.
Jon doesn’t own shares in Lloyds Banking Group or any other company mentioned in this article. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.
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