Lloyds TSB has been hit by the FSA with a £1.9m fine for the
misselling of structured products and told to set aside a further £98m
for expected compensation payments to investors over 22,500 sales
of the product.
The fine, which had been widely expected, comes the same week as
the Group replaced Scottish Widows chief executive Mike Ross with
Lloyds man Archie Kane.
The disciplinary action stems from the sales of a high income
equity-linked bond, the Extra Income and Growth Plan, through the
Lloyds branch network in four tranches between October 2000 and
It marks the first time the FSA has fined a provider over structured
products, it is believed however that it is currently investigating other
high street banks over their sales practices.
FSA director of enforcement Andrew Procter says: “Firms must
ensure that the products they recommend are suitable for an
investor's individual circumstances and that any potentially
unsuitable sales are identified. The procedure and controls to
achieve this need to be especially rigorous where medium or high
risk products are being offered to inexperienced investors.”