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Lloyds fined £4.3m for delayed PPI redress payments
by Michelle Abrego on Feb 19, 2013 at 10:16
The Financial Services Authority (FSA) has fined Lloyds TSB, Lloyds TSB Scotland and Bank of Scotland a total of £4.3 million for failings in their systems and controls that resulted in up to 140,000 customers receiving delayed payment protection insurance (PPI) redress.
The FSA said that between May 2011 and March 2012, Lloyds Banking Group sent 582,206 decision letters to PPI complainants agreeing to pay redress to them but failed to make the payment within 28 days.
A series of failures at Lloyds meant that not all customers were paid redress within that time frame, breaking FSA rules that state that redress must be paid promptly.
Up to 140,209 customers - nearly a quarter – received payment after 28 days.
Around 87,000 customers had to wait over 45 days, 56,000 over 60 days, 29,000 over 90 days and 8,800 over six months.
The FSA said that of the total, 24,589 payments dropped out of the process and Lloyds had to take action to ensure the payments were made.
The problems were only identified as a result of customers calling to chase payment, the regulator said.
Lloyds was also unable to fast-track payments to consumers, inform them when the payment would be made or explain why it had been delayed.
An FSA investigation it found that Lloyds did not even have a way of tracking of PPI redress payments until 9 March 2012 and there was no control at all for the resolution of PPI redress payments.
Tracey McDermott, the FSA’s 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.'
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