Lloyds pays out £300m in mortgage fees blunder
LLOYDS is repaying almost £300million to 600,000 mortgage customers over mistakes when it collected payments, it emerged last night.
The cash will be handed back to borrowers who fell behind and faced errors in the way their arrears were collected.
Bosses will unveil the scheme in results this morning alongside an extra payout for victims of PPI misselling – a separate debacle which has already cost Lloyds £17.4billion.
The average customer due a refund will get £350 in repaid fees and interest. Those affected will be contacted by Lloyds and do not need to get in touch.
It is thought there were botched financial difficulty assessments for people struggling to pay. Some were charged incorrect amounts between 2009 and 2016.
Lloyds’ behaviour is being investigated by the Financial Conduct Authority (FCA), which is said to have been consulted about the payout plan. Although most of the bill has already been revealed in previous accounts, Lloyds is today expected to announce it has set aside tens of millions more.
The bank first revealed it had a problem last year, announcing that ‘an enforcement team at the FCA had commenced an investigation in connection with the group’s mortgage arrears handling activities’.
‘This investigation is ongoing and it is currently not possible to make a reliable assessment of the liability, if any, that may result from the investigation,’ bosses said in their annual report. Lloyds faces a hefty fine if found at fault, and some senior bankers may lose their bonuses.
It is likely to cast a cloud over today’s financial results, which will be the first since the lender returned to private hands in May.
Taxpayers saved Lloyds with a £20.3billion bailout in 2008, but this money has been paid back – giving the Treasury a £500million profit.
Chief executive Antonio HortaOsorio has been credited with overseeing the turnaround, and has repeatedly stressed the importance of running an ethical bank free of the high- pressure sales tactics which were common in the past.
Mr Horta-Osorio took the reins in 2011 and the arrears scandal continued for at least five years after his appointment, meaning it is likely some blame will be laid at his door.
The boss has faced questions about his future since the bank’s return to private ownership.
However, he is now expected to oversee a three-year transformation plan at Lloyds, likely to involve further branch closures and job cuts.
City insiders expect the lender to today unveil a profit of around £2.9billion for the first half of 2017, and announce a dividend of 0.95p per share for its investors.
However, sources said it could also set aside £500million extra to cover PPI payments ahead of a compensation deadline in 2019.
The bank is separately battling with the consequences of a massive fraud at HBOS, which it bought in 2008. Staff in the Reading branch deliberately destroyed businesses.
Lloyds has earmarked £100million to compensate victims and launched an independent review into whether there was a cover-up.
‘Enforcement team is investigating’