Lloyds ‘facing £100m PPI fine’

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Published: Friday 5th June 2015 by The News Editor

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State-backed Lloyds Banking Group is reportedly about to be hit with a record fine of more than £100 million for mishandling complaints linked to the mis-selling of payment protection insurance (PPI).

Lloyds is expected to be given the penalty as soon as today following an investigation by the Financial Conduct Authority (FCA), Sky News reported. Neither the FCA nor Lloyds would comment.

The PPI scandal has dogged the banking sector in recent years and in particular Lloyds, which has had to set aside £12 billion to pay for a compensation programme, out of a running total of around £24 billion for all major banks.

Lloyds said in February that it had decided to freeze the release of shares that were part of deferred bonus awards for 2012 and 2013 until the conclusion of the FCA’s previously-disclosed investigation into PPI complaint handling.

This related to bonuses for all members of its group executive committee and some other senior executives

The new penalty comes after Clydesdale Bank was fined £20.7 million by the FCA in April after it found serious failings that meant thousands of PPI complaints might have been rejected unfairly.

That fine was at the time the largest imposed by the authority for failings related to PPI, but will be surpassed by the new penalty for Lloyds.

It comes days after the Government fired the starting gun on a £4 billion “Tell Sid” style share sale to be launched within the next 12 months as it seeks to sell off more of the taxpayer stake in the business.

Lloyds was rescued by the taxpayer at the height of the financial crisis, but the Treasury’s holding has since been shrunk from 43% to just under 19% as parcels of it have been disposed of on the stock market.

Last month, Lloyds reported a better-than-expected 21% rise in underlying profits to £2.18 billion for the first quarter as it said it benefited from the improving economy.

It partly benefited from not adding any further charges to its multi-billion pound bill to cover the PPI scandal in the first quarter, though it would not rule out more in the future.

The latest fine for Lloyds will come after it was hit with penalties last July totalling £218 million by the FCA and US regulators over benchmark rate-rigging practices.

These included an attempt to rip off the Bank of England over its financial life support scheme, behaviour described as “highly reprehensible” by Bank governor Mark Carney.

In December 2013, Lloyds was fined £28 million over incentive schemes that rewarded staff with “champagne bonuses” and put advisers under pressure to hit sales targets or face demotion.

Published: Friday 5th June 2015 by The News Editor

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