In 2015 bosses at Lloyds Bank were forced to wave goodbye to over £30million in past and future bonus payments once the bank was hit with a record fine £117million for mishandling payment protection insurance complaints.
The fine was the largest that had ever been issued in the retail banking sector – larger fines have previously been issued for rate-rigging and foreign exchange manipulation.
Lloyds did apologise to customers who were affected and offered the scant consolation that over £2milllion worth of bonuses would be withheld from executives.
The PPI scandal has been rumbling on in the banking sector for years, and has been particularly detrimental to Lloyd – who have been responsible for over half of the mis-selling of PPI policies.
The fine from the FCA came just a few months after Clydesdale Bank was fined over £20million for its own failings when dealing with PPI claims. This represented a change in the way the FCA dealt with cases such as these, beginning to deliver harsher punishments to the banks who engaged in unfair practices.
The Clydesdale fine set the record for the largest fine imposed by the regulators for PPI related failures, but it was easily beaten just a few months later by the Lloyds fine.
The Lloyds fine related to the period between March 2012 to May of the following year – when the period was investigated the authorities discovered that 37% of 2.3million complaints related to PPI were wrongly rejected.
Due to Lloyds’ misconduct, many customer complaints were unfairly rejected.