Lloyds Bank PLC

On 11 June 2020 the FCA fined Lloyds Bank, Bank of Scotland and The Mortgage Business — all part of Lloyds Banking Group — £64,046,800 for their handling of mortgage customers who fell into arrears between April 2011 and December 2015. The banks' systems and procedures meant call handlers often did not gather enough information about a customer's finances to judge what they could actually afford, so repayment arrangements were set that were unrealistic and risked making customers' difficulties worse. Around 526,000 customers had already received about £300 million under a redress scheme the group set up in 2017. The banks did not dispute the findings and qualified for a 30% discount; the fine would otherwise have been £91,495,400, and at the time it was the largest FCA penalty on a high street lender since 2015.

The FCA fined Lloyds Bank plc, Bank of Scotland plc and Black Horse Limited £117,430,600 for treating customers unfairly when handling PPI complaints between 5 March 2012 and 28 May 2013. The regulator found complaint-handling guidance—the so-called 'Overriding Principle'—directed staff to assume sales processes were compliant and that root-cause findings were not taken into account, which led to many valid complaints being rejected; LBG assessed complaints on more than 2.3 million PPI policies and rejected 37% of them. LBG qualified for a 30% early settlement discount (Stage 1), so the penalty was reduced from £167,758,035 to £117,430,600. The breach was of Principle 6 (Customers' interests), which requires firms to pay due regard to their customers' interests and treat them fairly.

On 28 July 2014 the FCA fined Lloyds Bank plc and Bank of Scotland plc a total of £105,000,000 (split £52.5m each), a figure discounted from an original aggregate penalty of £150,000,000 for early settlement. The FCA found the firms breached Principle 3 (firms must take reasonable care to organise and control their affairs) and Principle 5 (firms must observe proper standards of market conduct) by manipulating submissions used to calculate two benchmark reference rates — the sterling Repo Rate and LIBOR — in order to seek to influence those rates. The penalty and the settlement discount are recorded in the FCA final notice dated 28 July 2014.

On 10 December 2013 the FCA fined Lloyds TSB Bank plc and Bank of Scotland plc a combined £28,038,800 for breaches of Principle 3 (firms must act with due skill, care and diligence). The breaches arose from serious deficiencies in systems and controls over financial incentives for branch advisers who sold protection and investment products between 1 January 2010 and 31 March 2012 — incentives included variable pay, bonus thresholds and a strong bias toward protection sales that created a significant risk of inappropriate recommendations. The firms settled early and received a 20% settlement discount (the penalty would otherwise have been £35,048,500); they are reviewing sales by higher‑risk advisers in the Relevant Period and will provide redress to customers where appropriate.

On 15 February 2013 the Financial Services Authority (the FSA, the FCA’s predecessor) imposed a final notice and a £4,315,000 penalty on Lloyds TSB Bank Plc, Lloyds TSB Scotland Plc and Bank of Scotland (together Lloyds Banking Group) for failing to pay PPI redress promptly to complainants between 5 May 2011 and 9 March 2012. The FSA said LBG sent 582,206 decision letters agreeing to pay redress but failed to make payments within its 28‑day target in up to 140,209 (24%) cases; 24,589 cases had inadvertently dropped out of the payments process and remedial action was required. The FSA found breaches of Principle 3 (firms must take reasonable care to organise and control their affairs, including adequate risk management systems) and DISP 1.4.1R(5) (firms must comply promptly with offers of redress accepted by complainants); LBG agreed an early settlement (a 30% Stage 1 discount) and carried out a full reconciliation, paid interest at 8% p.a. where appropriate, and implemented process improvements including a PPI payment validation tool.

In September 2003 the FSA fined Lloyds TSB Bank plc (LTSB) £1.9m for serious failings in how it sold the Extra Income and Growth Plan (EIGP). Around 51,000 EIGP policies were sold in four tranches between October 2000 and July 2001; the FSA found that LTSB’s branch network sold about 22,500 policies (44% of sales) that were unsuitable because customers ended up too concentrated in the product. LTSB agreed not to refer the matter to the tribunal, has paid about £98m in compensation to roughly 22,500 customers, and the FSA said the penalty was reduced because LTSB cooperated, carried out remedial work and settled early.