Pressure mounts on Lloyds boss as bank is fined £4.3m over delayed payment protection insurance redress

 

Antonio Horta-Osorio came under more pressure today after Lloyds Banking Group was slammed with a £4.3 million fine for failing to pay compensation quickly enough to tens of thousands customers.

The fine is a major blow to chief executive Horta-Osorio, who grabbed the headlines when he joined Lloyds from Santander in January 2011 by ordering the bank to start paying out to customers who were mis-sold payment protection insurance (PPI). That broke ranks with the other high street banks which had launched a legal challenge against the Financial Services Authority over PPI claims.

Lloyds is already facing investor wrath over Horta-Osorio’s bonus for last year which could be as high as £1.5 million.

The group was by far the biggest mis-seller of PPI, with hundreds of thousands of customers affected. It has already set aside £5.3 billion for claims, with reports that this could be increased by another £1 billion when it reports its 2012 results next week.

Today the FSA said more than 140,000 customers who were told they were due compensation by the bank between May 2011 and March 2012 were not paid within the 28 days Lloyds had promised. That was almost a quarter of all claims Lloyds accepted over that time.

Some 8800 customers had to wait more than six months for payment and almost 25,000 inadvertently dropped out of the process, forcing Lloyds to take action to make sure they were paid. The bank also had no way to make fast-track payments to customers who were left waiting.

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 now expect is that redress, when it is due, will be paid promptly.

“The size of this fine reflects how seriously we view these breaches.” The FSA would not comment whether other banks might face similar penalties for slow payments.

The regulator said the fine also reflected Lloyds’ record. In 2003 it was fined £1.9 million for sales of high income bonds; in 2011 £3.5 million for mishandling complaints; and last year £4.2 million for incorrect mortgage terms.

A Lloyds spokesman 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... It is important to note that almost all customers who were due redress during the review period have now been paid in full and, as the FSA notes, we have taken steps to ensure customers have not been financially disadvantaged.”

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Massage Therapist / Sports Therapist / Physio / Osteopath

£12000 - £24000 per annum: Recruitment Genius: An opportunity has arisen for o...

Recruitment Genius: Account Manager / Sales Executive - Contract Hire

£35000 - £60000 per annum: Recruitment Genius: This industry leader provides c...

Recruitment Genius: Project Coordinator

£28000 - £30000 per annum: Recruitment Genius: A Project Coordinator is requir...

Recruitment Genius: Area Sales Manager - Midlands

£20000 - £25000 per annum: Recruitment Genius: This is an exciting opportunity...

Day In a Page

John Palmer: 'Goldfinger' of British crime was murdered, say police

Murder of the Brink’s-MAT mastermind

'Goldfinger' of British crime's life ended in a blaze of bullets, say police
Forget little green men - aliens will look like humans, says Cambridge University evolution expert

Forget little green men

Leading evolutionary biologist says aliens will look like humans
The Real Stories of Migrant Britain: An Algerian scientist adjusts to life working in a kebab shop

The Real Stories of Migrant Britain

An Algerian scientist struggles to adjust to her new life working in a Scottish kebab shop
Bodyworlds museum: Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy

Dying dream of Doctor Death

Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy
UK heatwave: Temperature reaches 39.8 degrees on Central Line - the sweatiest place in London

39.8 degrees recorded on Tube

There's hot (London) and too damn hot (the Underground). Simon Usborne braved the Central line to discover what its passengers suffer
Kitchens go hi-tech: From robot chefs to recipe-shopping apps, computerised cooking is coming

Computerised cooking is coming

From apps that automatically make shopping lists from your recipe books to smart ovens and robot chefs, Kevin Maney rounds up innovations to make your mouth water
Jessie Cave interview: The Harry Potter star has published a feminist collection of cartoons

Jessie Cave's feminist cartoons

The Harry Potter star tells Alice Jones how a one-night stand changed her life
Football Beyond Borders: Even the most distruptive pupils score at homework club

Education: Football Beyond Borders

Add football to an after-school homework club, and even the naughtiest boys can score
10 best barbecue books

Fire up the barbie: 10 best barbecue books

We've got Bibles to get you grilling and smoking like a true south American pro
Wimbledon 2015: Nick Bollettieri - Junk balls and chop and slice are only way 5ft 1in Kurumi Nara can live with Petra Kvitova’s power

Nick Bollettieri's Wimbledon Files

Junk balls and chop and slice are only way 5ft 1in Kurumi Nara can live with Petra Kvitova’s power
Ron Dennis exclusive: ‘This is one of the best McLaren teams ever – we are going to do it’

‘This is one of the best McLaren teams ever – we are going to do it’

Ron Dennis shrugs off a poor start to the season in an exclusive interview, and says the glory days will come back
Seifeddine Rezgui: What motivated a shy student to kill 38 holidaymakers in Tunisia?

Making of a killer

What motivated a shy student to kill 38 holidaymakers in Tunisia?
UK Heatwave: Temperatures on the tube are going to exceed the legal limit for transporting cattle

Just when you thought your commute couldn't get any worse...

Heatwave will see temperatures on the Tube exceed legal limit for transporting cattle
Exclusive - The Real Stories of Migrant Britain: Swapping Bucharest for London

The Real Stories of Migrant Britain

Meet the man who swapped Romania for the UK in a bid to provide for his family, only to discover that the home he left behind wasn't quite what it seemed
Cheaper energy on the way, but it's not all sunshine and rainbows

Cheaper energy on the way, but it's not all sunshine and rainbows

Solar power will help bring down electricity prices over the next five years, according to a new report. But it’s cheap imports of ‘dirty power’ that will lower them the most