Record fine for UK’s Lloyds for mis­treat­ing com­plaints

The China Post - - WORLD BUSINESS -

Bri­tish reg­u­la­tors on Fri­day said they had fined Lloyds Bank­ing Group 117 mil­lion pounds (US$179 mil­lion) for un­fair treat­ment of cus­tomer com­plaints af­ter they were mis­sold an in­sur­ance prod­uct.

The Fi­nan­cial Con­duct Author­ity (FCA) said it had is­sued its largest ever re­tail bank­ing fine to LBG “for fail­ing to treat their cus­tomers fairly when han­dling Pay­ment Pro­tec­tion In­sur­ance com­plaints be­tween March 2012 and May 2013”, ac­cord­ing to a state­ment.

It comes af­ter Lloyds and other UK banks had al­ready been or­dered to com­pen­sate cus­tomers for mis­selling PPI in­sur­ance prod­ucts — a move that has cost the lenders an es­ti­mated 26 bil­lion pounds to date.

Lloyds’ bill is the high­est at about 12 bil­lion pounds, while the to­tal amount set aside by lenders for PPI com­pen­sa­tion is far higher than the fines handed to banks around the world for the rig­ging of for­eign ex­change and Li­bor in­ter­est rate mar­kets.

“If trust in fi­nan­cial ser­vices is go­ing to be re­stored fol­low­ing the wide­spread mis-sell­ing of PPI, then cus­tomers need to be con­fi­dent that their com­plaints will be treated fairly,” said Georgina Philip­pou, FCA act­ing direc­tor of en­force­ment and mar­ket over­sight.

Lloyds, which re­mains 19-per­cent owned by the Bri­tish gov­ern­ment fol­low­ing a bailout in the wake of the 2008 fi­nan­cial cri­sis, apol­o­gized to cus­tomers af­fected and said 2.65 mil­lion pounds worth of bonuses was be­ing with­held from ex­ec­u­tives un­der the set­tle­ment agreed with the FCA.

The group’s to­tal bonus pool for 2015 will mean­while be cut by about 30 mil­lion pounds as a re­sult of the fine.

“Whilst our in­ten­tions were right, we made mis­takes in our han­dling of some PPI com­plaints,” LBG chief ex­ec­u­tive An­to­nio Hor­taO­so­rio said in a state­ment is­sued by the bank.

“I am very sorry for this. We have been work­ing hard with the FCA to en­sure all cus­tomers re­ceive ap­pro­pri­ate re­dress.”

In 2011, Bri­tish banks lost a high court ap­peal against tighter reg­u­la­tion of PPI, which pro­vides in­sur­ance for con­sumers should they fail to meet re­pay­ments on a credit prod­uct such as con­sumer loans, mort­gages or pay­ment cards.

PPI be­came con­tro­ver­sial af­ter it was re­vealed that many cus­tomers had been sold it with­out un­der­stand­ing that the cost was be­ing added to their loan re­pay­ments.

Bri­tish au­thor­i­ties sub­se­quently banned si­mul­ta­ne­ous sales of PPI and credit prod­ucts.

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