The FCA has fined Lloyds Banking Group a record £117m for failing to properly handle payment protection insurance complaints.
The fine, issued against Lloyds Bank and Lloyds subsidiaries Bank of Scotland and Black Horse, is the largest ever retail penalty issued by the regulator.
The bank is now reviewing or automatically upholding around 1.2 million PPI complaints, , and has set aside £710m for redress.
The FCA says as a result of Lloyds’ misconduct, a significant number of customer complaints were “unfairly rejected”.
It notes that of 2.3 million PPI complaints received against Lloyds between March 2012 and March 2013, 37 per cent were rejected.
Complaint handling staff were told to assume the bank’s PPI sales processes were compliant and robust. This was known as the “overriding principle”.
Some complaint handlers dismissed customer claims or did not fully investigate complaints. The bank also failed to contact customers so they could give their account of the sale.
After intervention from the FSA, Lloyds removed the overriding principle from its complaint process.
FCA acting director of enforcement and market oversight Georgina Philippou says: “Customers who had already been treated unfairly once by being missold PPI were treated unfairly a second time and denied the redress they were owed. Lloyds’ conduct was unacceptable.”
A total of £19.2bn has paid out for PPI misselling between January 2011 and March 2015.
As at 31 December 2014 Lloyds had set aside a total of over £12bn in relation to PPI misselling.
Labour MP and former Treasury Select Committee member John Mann responded to the news of the fine by asking when the bank’s senior management would “get a grip” on its PPI troubles.
“The taxpayer still owns a 19% stake in the bank and its time we heard from the senior non-executive directors about what they have been doing whilst the bank lurches from one scandal to the next,” Mann says.
“It seems that they have been happy to collect a hefty salary for sitting on the board but have been neglecting their duty to hold the directors to account. They have been fiddling whilst the bank burns.”