Lloyds faces a £100 million fine for mishandling insurance selling complaints

Lloyds antonio horta osorioReutersLloyds CEO Antonio Horta-Osorio speaks at the British Chambers of Commerce annual meeting in central London February 10, 2015.

Britain’s Financial Conduct Authority will slap Lloyds with a £100 million ($US154 million) fine related to the mis-selling of payment protection insurance (PPI), according to Sky News.

According to a Sky report today, the UK financial regulator will demand the fine as early as Friday. 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.

Lloyds and the FCA declined to comment to Business Insider.

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