Lloyds Fined £4.3m For Delayed PPI Payouts
Lloyds Banking Group has been fined £4.3m by the City watchdog for failings that resulted in up to 140,000 customers receiving delayed payment protection insurance (PPI) redress.
The Financial Services Authority (FSA) fined three firms owned by Lloyds over "failings in their systems and controls".
The three firms punished by the FSA over their behaviour are Lloyds TSB Bank, Lloyds TSB Scotland and Bank of Scotland, known collectively as LBG.
The FSA said: "Between May 2011 and March 2012, LBG sent 582,206 decision letters to PPI complainants agreeing to pay redress to them.
"FSA rules state that redress must be paid promptly and, in line with that, LBG aimed to make payment within 28 days of these decision letters.
"However, a series of failures at LBG meant that not all customers were paid redress within that time frame."
The customers were not paid redress within 28 days of receiving a decision letter and almost 9,000 had to wait more than six months for their compensation, the FSA said.
The payments were identified as a result of aggrieved customers calling to chase payment from Lloyds and media attention highlighting the plight of affected customers.
The FSA added: "Further, when customers telephoned LBG to enquire about the non-receipt of expected PPI redress payments, deficiencies in its process meant LBG was unable to fast-track the payment to the customer, inform them when payment would be made, or explain why it had been delayed."
Britain's high street banks have been hit by massive claims over PPI mis-selling.
As a result, the banks have made provision for more than £10bn being paid out to those affected customers.
Approached by Sky News after the FSA announcement was made, Lloyds 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 at the outset and experienced some administrative errors as we scaled up our systems and processes.
"We acknowledge that this led to some customers not being compensated on time and we apologise to those customers whose payments were delayed.
"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."