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Lloyds fined £4.3m over PPI payment delays

A quarter of customers who complained to Lloyds about payment protection insurance (PPI) have had their redress payments delayed, according to the FSA.

 
Lloyds fined £4.3m over PPI payment delays

The City watchdog has fined Lloyds Banking Group £4.3 million for delaying compensation pay-outs to consumers which it mis-sold payment protection insurance (PPI), including 25,000 payments that ‘inadvertently fell out’ of the system.

Three Lloyds’ businesses, TSB Bank, Lloyds TSB Scotland and Bank of Scotland, have fallen foul of the Financial Services Authority (FSA). The regulator found failings in the companies’ systems which resulted in 140,000 customers receiving delayed PPI redress.

Lloyds sent 582,206 letters to PPI customers between May 2011 and March 2012 agreeing to pay redress to them. Lloyds aimed to make payments within 28 days but internal failures meant consumers were left waiting for far longer.

Up to 140,209 customers received payment after the 28 day time frame, with 87,000 waiting 45 days, 56,000 over 60 days, 29,000 over 90 days and 8,800 over six months. Another 24,589 payments ‘inadvertently dropped out of the process’ and were identified after complainants chased their payments.

Lloyds was also unable to fast-track payments to customers, explain when payments would be made, or explain why they had been delayed.

The FSA found Lloyds had failed to:

  • Establish an adequate process for preparing redress payments for PPO.
  • Give staff the knowledge or experience to ensure the redress process worked properly.
  • Track PPI redress payments.
  • Monitor whether it was making all the PPI redress payments.

Tracey McDemott, FSA director of enforcement and financial crime, said: ‘The industry let customers down badly in relation to the sale of PPI. The significant volume of complaints is a product of Lloyds’ own failings and the least customers can now expect is that redress, when it is due, will be paid promptly.

‘In short, Lloyds’ PPI redress payment systems fell well below the standard the FSA expects, and the size of this fine reflects how seriously we view these breaches…PPI is an area of continuing focus for the FSA and we continue to monitor how firms handle complaints and pay redress.’

Lloyds is the second bank to be fined this year over PPI redress delays. Last month The Co-operative Bank was fined £113,000 for failing to process PPI complaints quickly and fairly.

A Lloyds' spokesman said when the bank started compensating customers in 2011 it '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'.

He added: '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...we have taken steps to ensure customers have not been financially disadvantaged.'

3 comments so far. Why not have your say?

A Sick SIPP Owner

Feb 19, 2013 at 15:20

Better than a fine - paid to HMG, by HMG? or are any shareholders pension funds, why not require that those who have had to wait be paid interest on the money Lloyds have improperly acquired from their (ex) customers and that they should not have kept compounded at 28 day intervals with the rate set at 8% above the BoE rate appliicable for each of those periods since the money was improperly extracted from them!

Ah! - no - would not want to set a precident for the wronged to not only have restitution of their loss, but to also be given recompense for suffering the wrong in the first place - and such payments would hurt MHG.

We all know that they need lots more money from homeowners if they are not going to get it for their care until after they die - that's where the 'mansion tax' will come in.

And how would 'Tom' have managed the good life without income, when the government decided his suberban house was taxable at £30,000 pa - well it was in a good location - with all that land that couls have had a nice block of 'affordable' homes built on it - so would have been worth £5M or maybe more.

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Mike R

Feb 19, 2013 at 15:38

so does this fine money go into the MP expenses fund or the FSA bonus pot or is it invested with LLoyds ?? either way it seems like Tax payers money being re circulated.

I also hear that the Banking Ombudsman service is swamped by arbitrating on such claims-- will they get fined if they delay their judgments>>??

Either way I hope the FSA manage next time to catch the action before rather than after !! and make a judgement which will not involve recycling taxpayers money.

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joe stalin

Feb 19, 2013 at 15:42

strikes me that everyone that took out PPI had it "missold" I suppose it is no different to everyone that is involved in even the slightest of car accidents suffers from severe whiplash. On that token the claims companies that pester me day in day out have only the best intentions at heart. bless

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