Banking watchdog imposes £4.3m fine
Lloyds Banking Group has been fined £4.3m by the Financial Services Authority (FSA) for delaying PPI compensation payouts. The industry watchdog found more than 140,000 customers who were due compensation from Lloyds between May 2011 and March 2012 were not paid within 28 days, as promised by the bank. That figure equates to almost a quarter of successful claims against Lloyds during that period.
Under FSA rules, compensation should be paid promptly, but the regulator said around 29,000 customers had to wait more than 90 days to receive their money, with 8,800 of those waiting for more than six months. Around 24,000 customers had their payments mistakenly dropped out of the process and only received their money after complaining to the bank.
The FSA found Lloyds had not put sufficient planning into preparing payments to customers who were mis-sold PPI, and as a result, could not cope with the large volumes of claims and redress payments. Lloyds was also unable to fast-track payments to customers who complained to the bank after their compensation had been delayed.
Tracey McDermott, the FSA’s director of enforcement and financial crime said: “The industry let customers down badly in relation to the sale of PPI. The significant volume of complaints is a product of Lloyds’ own failings and the least customers can expect is that redress, when it is due, will be paid promptly.”
She added: “Lloyds’ PPI redress payment systems fell below the standard the FSA expects, and the size of this fine reflects how seriously we view these breaches.”
Lloyds has apologised to customers, acknowledging it underestimated the scale of the PPI scandal. In a statement, the bank said: “When we took the lead in 2011 to compensate customers on PPI, we had not fully anticipated the volume of complaints to be processed at the outset and experienced some administrative errors as we scaled up our systems and processes. We acknowledge that this led to some customers not being compensated on time and we apologise to those customers whose payments were delayed. It is important to note that almost all customers who were due redress during the review period have now been paid in full.”