Lloyds confirmed this morning that it will pay the Financial Conduct Authority £117 million ($US180 million) fine related to the mis-selling of payment protection insurance (PPI).
Lloyds said the payment was to settle the FCA’s probe into how it mishandled complaints during the period March 2012 to May 2013.
Lloyds said in a statement:
The Group apologises for the impact on those customers affected and accepts that part of its complaint handling process led to a failure to provide fair outcomes for a significant number of customers. Although the FCA has not found that the Group acted deliberately, the Group has reviewed all customer complaints fully defended during the Relevant Period. This review has been completed and over 90 per cent of customers have received payment and the remainder will be completed by the end of June. The remediation costs of reviewing these affected cases are not materially in excess of existing provisions.
It won’t be a huge surprise to the markets this morning, as it was widely reported yesterday by Sky news, that Lloyds would be paying at least £100 million ($US153 million) to settle a PPI probe into its handling of complaints. Of course, at the time, both the FCA and Lloyds declined to comment.
PPI was a form of insurance intended to pay out if consumers failed to make payments on their loans. Many consumers were duped into buying it, or did not know how it worked. PPI was wrongly sold alongside loans, credit cards and mortgages and banks have been forced to pay out to customers who were wrongly the coverage.
The PPI mis-selling scandal has now cost the banking industry around £26 billion ($US40 billion) in compensation payments and admin fees.
Lloyds, which is just under 19%-owned by the government, has
set aside around £12 billion ($US18.4 billion) in PPI-related compensation and administration charges, so far.
In April, Clydesdale was hit with a £21 million ($US31.96 million) fine from Britain’s FCA for its handling of PPI claims, saying the bank failed to handle claims properly. NAB has been told to set aside £1.7 billion ($US2.59 billion) to cover potential claims and fines.