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Lloyds handed record fine for PPI complaints mis-handling

5th June 2015


The City watchdog has handed out its largest ever fine of £117 million to Lloyds Bank for mis-handling payment protection insurance (PPI) complaints.


The Financial Conduct Authority (FCA) found that customers who complained about PPI between March 2012 and May 2013 were not treated fairly.


During that time complaints relating to more than 2.3 million PPI policies were made and 37% of the complaints rejected.


Although the bank is required to be impartial in assess complaints, in March 2012 Lloyds issued guidance instructing complaint handlers that the overriding principle when assessing complaints was that Lloyds’ PPI sales processes were compliant. It also failed to notify complaint handers of the known failings identified in its PPI sales processes.


This meant complaint handlers dismissed customers’ personal accounts of PPI sales or did not fully investigate the complaints. In some cases, Lloyds did not contact customers to enable them to give their account of the sale.


Georgina Philippou, acting director of enforcement and market oversight at the FCA, said due to this misconduct a significant number of customer complaints were unfairly rejected.


‘PPI complaint handling is a high priority issue for the FCA. If trust in financial services is going to be restored following the widespread mis-selling of PPI, then customers need to be confident that their complaints will be treated fairly,’ she said.


‘The size of the find today reflects the fact that so many complaints were mis-handled by Lloyds. Customers who had already been treated unfairly once by being mis-sold PPI were treated unfairly a second time and denied the redress they were owed. Lloyds’ conduct was unacceptable.’


Richard Lloyd, executive director of consumer group Which?, said: ‘It’s unacceptable that Lloyds continuously let its customers down by failing to resolve legitimate complaints quickly and fairly.


‘Today’s fine should be a red flag for any bans that are stopping people getting back money they’re rightly owed. The regulator must continue to force banks to change their culture so failings like this aren’t repeated.’



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