Lloyds Banking Group is to review the sales of Scottish Widows structured products over a five year period and pay compensation to customers where appropriate.
The review has been triggered by a Money Mail investigation which says it has found evidence customers in their 60s and 70s had been promised 100 per cent capital protection and returns of up to 75 per cent which have not materialised.
The newspaper sent its investigation to Lloyds group chief executive Antonio Horta-Osorio and Financial Conduct Authority chief executive Martin Wheatley last month.
The bank is now in the process of paying compensation to those who were missold, and is investigating complaints relating to product sales between 2007 and 2012.
Lloyds has set up a special complaints team to review every policy that matures with a poorer return than an average savings account. The review will focus on customers at or near retirement; who had never invested in the stock market before; who were pursued by salesmen after receiving a cash windfall; and who were told to invest a large portion of their life savings. If products were missold the bank will pay compensation equal to the return on a cash savings account, typically Bank of England base rate plus 1 per cent.
Money Mail investigated sales of the Scottish Widows Capital Protected Fund 5, the Scottish Widows Protected Capital Solutions Fund, and the Scottish Widows Guaranteed Investment Bond.
The Capital Protected Fund was linked to the performance of the FTSE100 which stood at 6,046 when the policies began and finished only fractionally higher when they matured.
A total of 25,616 Capital Protected Fund products have matured in the last six months, and a further 5,993 policies matured last week.
The Protected Capital Solutions Fund has had 2,827 policies mature to date, and the Guaranteed Investment Bond had had 8,551 mature since May 2012.
Money Mail reports that Lloyds has said the review will also address allegations that branch advisers misled customers over the products’ charging structures.
Lloyds head of retail banking Alison Brittain told the newspaper it will investigate whether products were missold as they mature. She says: “We will strive to deliver fair outcomes for all our customers and will assess each case on an individual basis.”