Lloyds in leak row with City watchdog

FURIOUS Lloyds executives suspect the City watchdog of leaking details of its record £117m fine for mishandling payment protection insurance complaints, writes James-Salmon.

Details of the penalty emerged on Thursday evening – before the official announcement was made yesterday.

A row is brewing between Lloyds (down 0.41p at 87.09p) and the Financial Conduct Authority over the source of the leak. Insiders last night pointed out the information could have come from numerous sources, including Lloyds as well as legal advisers and public relations executives who worked on the cases.

Sources also insisted that the regulator has little to gain from deliberately leaking information about the record fine, as this threatens to reduce media coverage on the day of the announcement.

An FCA spokesman said: ‘We are confident that this information was not leaked by the FCA.’

The FCA is particularly anxious to avoid more controversy. Its reputation was damaged last year after a bungled early briefing to a newspaper about an insurance company probe wiped billions of pounds from the value of insurance firms as their share prices were hammered. The debacle resulted in several senior executives at the FCA, including chief executive Martin Wheatley, losing their bonuses.

Last night one insider said any suggestion the FCA was behind another major leak could put further pressure on Wheatley, who has been criticised heavily by the Treasury Select Committee for the insurance probe affair. But City commentator David Buik from Panmure Gordon played down the row, saying ‘leaking a fine of that size is completely unacceptable but not market sensitive’, while leaking details of the insurance group probe ‘absolutely rattled the markets’.

The huge fine is another blow to Lloyds’ reputation. Between March 2012 and May 2013 its frontline staff routinely rejected legitimate complaints about PPI. During this period Lloyds received 2.3m complaints and rejected 37pc, or 863,000. The bank has been forced to reopen these cases. It has apologised for its treatment of customers and is docking bonuses worth £2.65m from 14 senior executives.