View the article online at http://citywire.co.uk/money/article/a659924
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.
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.'
News sponsored by:
Making the most out of Europe's potential means seeing things differently. Learn more about how BlackRock's focused approach to investing in Europe helps investors unlock the continent's vast potential.
In this guide to investment trusts, produced in association with Aberdeen Asset Management, we spoke to many of the leading experts in the field to find out more.
More about this:
More from us
- Mis-sold consumers could face PPI claims deadline
- MPs to grill bank bosses over PPI mis-selling
- Co-op Bank fined £113,000 over PPI delays
- Google shares suspended, Barclays hit by fresh PPI claims
- Lloyds to scrap incentives as analysts predict PPI bill rise
Tools from Citywire Money
From the Forums+ Start a new discussion
Weekly email from The Lolly
Get simple, easy ways to make more from your money. Just enter your email address below
An error occured while subscribing your email. Please try again later.
Thank you for registering for your weekly newsletter from The Lolly.
Keep an eye out for us in your inbox, and please add email@example.com to your safe senders list so we don't get junked.