Simon Read: You still can't bank on Lloyds to do right thing

  • @simonnread

The giant insurer Legal & General was in the spotlight this week after it failed to pay the pensions of 12,000 people. The company's blunder was because of a computer glitch, it said. But that's of little consequence to those affected, many of whom are reliant on the income from their annuity payouts.

In its defence the company pointed out that it was the first mistake it had made in 25 years of dealing with pension payouts and that the mistake did not affect any of the other 650,000 annuity customers it looks after.

Look, companies - and people, of course - make mistakes and we shouldn't mark them down as bad 'uns simply because of an occasional cock-up. What's more crucial is how they react to it.

L&G's response - to date - has seemed exemplary. Once it had realised the problem on Thursday, it took action to ensure that all customers affected would get their payouts as soon as possible.

For most that meant getting their cash yesterday, just a day late, although some payments may be delayed until Tuesday because of the banks' clearing systems, L&G said.

The company then contacted customers and issued an apology and, crucially, promised to put things right for anyone adversely affected - because of bank charges, for instance - because of the error.

And there the tale should end. Company makes mistake; company deals effectively with mistake. Company should be forgiven.

Sadly, as most of you may have experienced in the past, big financial firms don't very often deal with their mistakes quickly and effectively. Instead many become obstructive or use delaying tactics to avoid putting their hands in their pockets to put things right for customers.

The latest example of this came earlier this week when the partly state-owned Lloyds Banking Group was slapped with yet another fine by the regulator.

This week's fine was £4.3m. The reason? Because the bank failed to pay compensation quickly enough to tens of thousands of customers.

The City watchdog reported that more than 140,000 Lloyds customers who were told they were due compensation by the bank between May 2011 and March 2012 were not paid within the 28 days the bank had promised. That accounted for almost a quarter of all claims Lloyds accepted over that time period.

It gets worse. Some 8,800 Lloyds customers had to wait more than six months for payment and almost 25,000 somehow fell out of the process altogether, forcing Lloyds to take fresh action to make sure they were paid.

In 2011 the bank was fined £3.5m for mishandling complaints. Two years on, it's a huge disappointment that it is still failing to act quickly to put things right.

Twitter: @simonnread