Lloyds faces record £100m PPI penalty

The fine is a record for a PPI-related penalty for a single institution

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The Independent Online

Lloyds Banking Group is expected to be fined £100m by the Financial Conduct Authority for mishandling customer complaints stemming from sales of payment protection insurance. It will be a record PPI-related fine for a single institution.

Clydesdale Bank was hit with a £20.7m penalty for a similar offence last month. However, Clydesdale’s offence was compounded because it provided false information to the Financial Ombudsman Service, which prompted the FCA to increase the size of its fine. The larger penalty to be imposed on Lloyds, according to reports, reflects its substantial share of the PPI market.

Nevertheless, the fine will underscore the status of the PPI mis-selling scandal as the most costly in British banking history, with £24bn in compensation set aside to date.

Lloyds has earmarked £12bn to repay customers, of which £10bn has been disbursed. It was fined £4.3m in 2013 for failings that delayed compensation to customers missold PPI.

Last month, the FCA ruled that Clydesdale implemented policies which meant its complaint-handlers did not take into account all of the relevant documents when deciding how to deal with PPI complaints.

It also said that a team within Clydesdale’s PPI complaints-handling operation altered some printouts given to the ombudsman to make it look as if the lender held no relevant documents, and deleted all PPI information from a separate printout listing the products sold to the customer.