Lloyds settles on record £117m FCA fine

During that period, Lloyds assessed customer complaints relating to more than 2.3 million PPI policies and rejected 37% of those complaints.

Lloyds also informed complaint handling staff that the Bank's PPI sales processes were compliant and robust, and did not notify them of known failings identified in its PPI sales processes during the relevant period.

Complaint handlers therefore justified the decision to reject customers’ complaints on the basis that the sales process used by Lloyds was robust, when Lloyds knew there were significant sales process failures and mis-selling.

Some customers whose complaints were rejected were told that their complaint had been ‘fully investigated’ with ‘appropriate weight and balanced consideration [given] to all available evidence’, when this was not the case.

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

Georgina Philippou, acting director of enforcement and market oversight at the FCA, said:

“PPI complaint handling is a high priority issue for the FCA. If trust in financial services is going to be restored following the widespread mis-selling of PPI, then 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’ conduct was unacceptable.”

An FCA statement said that 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 1.2 million PPI complaints, including those within the relevant period.

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

Lloyds announced in February 2015 that it had decided to freeze the release of shares in respect of deferred bonus awards from 2012 and 2013 for all members of the Group Executive Committee and for some other senior executives as a result of the FCA’s Enforcement investigation.

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.