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Lloyds Banking Group fined £117m for failing to handle PPI complaints fairly

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The Financial Conduct Authority (FCA) has fined Lloyds Banking Group £117m for failing to treat its customers fairly when handling Payment Protection Insurance (PPI) complaints, between March 2012 and May 2013.

Lloyds Bank Plc, Bank of Scotland Plc and Black Horse Ltd (together Lloyds Banking Group) assessed customer complaints relating to more than 2.3million PPI policies, and rejected 37% of those complaints.

Firms are required to assess complaints impartially and can reject unfounded claims.

Lloyds did not notify complaint handlers of known failings identified in its PPI sales processes during the relevant period. Some complaint handlers relied on the overriding principle to dismiss customers’ personal accounts of what had happened during the PPI sale, or to not fully investigate customers’ complaints. In some instances, Lloyds did not contact customers to enable them to give their account of the sale.

As a result of Lloyds’ misconduct, a significant number of customer complaints were unfairly rejected.

Acting director of enforcement and market oversight at the FCA Georgina Philippou, said: “PPI complaint handling is a high priority issue for the FCA. If trust in financial services is going to be restored, customers need to be confident that their complaints will be treated fairly.”

“The size of the fine today reflects the fact that so many complaints were mishandled by Lloyds.  Customers who had already been treated unfairly once by being mis-sold PPI were treated unfairly a second time and denied the redress they were owed.”

Lloyds has since made significant progress towards the fairer treatment of customers in its general complaint handling operation and has established an extensive remediation programme to re-review or automatically uphold approximately 1.2million PPI complaints, including those within the relevant period. It has also removed the Overriding Principle from its PPI complaint assessment process.

Lloyds has set aside a total of £710m to cover any redress due to affected customers.

Customers affected and due redress are being contacted directly.

Lloyds agreed to settle at an early stage of the investigation and therefore qualified for a 30% discount. Were it not for this discount the FCA would have imposed a fine of £167,758,035.



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