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MPs lay into Lloyds over PPI and interest rate swap scandals

by Alex Steger on Feb 05, 2013 at 07:37

MPs lay into Lloyds over PPI and interest rate swap scandals

MPs have attacked Lloyds Banking Group’s chairman and chief executive over the bank’s behaviour as the payment protection insurance (PPI) mis-selling scandal unfolded.

The bank was accused of failing to acknowledge the scale of the problem early enough and of pressuring the Financial Services Authority (FSA) into dropping enforcement action against it following a two year investigation, an allegation it denied.

Appearing in front of MPs Lloyds chief executive António Horta-Osório (pictured) and chairman Winfried Bischoff were also forced to defend the bank’s decision to await the outcome of the British Bankers Association’s challenge to an FSA ruling on PPI mis-selling rather initiate client contact and redress.

During a tense exchange with Bischoff, Labour peer John Mcfall accused the bank of avoiding regulatory enforcement action in 2008 due its size and legal resources, something smaller banks, which were fined at the time, lacked.

‘Lloyds bullied to make sure enforcement did not take place,’ he said.

Bischoff denied the accusation saying the bank did not bully the regulator ‘in any way’.

McFall went on to accuse Bischoff of sitting on a 'cosy board while the world was passing the board by’ and of not proactively putting a halt to PPI sales as it was too profitable a product for the bank.

‘It was a profitable product and you were damned if you were going to stop selling this product,’ he said.

Bischoff denied this pointing out Lloyds stopped selling PPI in 2010.

The pair were also grilled over Lloyds' sale of interest rate swaps to small and medium sized businesses (SMEs).

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4 comments so far. Why not have your say?

Andy via mobile

Feb 05, 2013 at 08:17

Hardly a surprise this one - I used to work in one of the 'big four' banks. Was never involved in PPI at all, however I heard many occasions where if a personal loan was sold without insurance you had to go see the branch manager & justify why you hadn't sold it with the loan. The fact that someone was ineligible for some of the benefits eg unemployment benefit for someone who's benefit was NOT a valid reason for not taking PPI according to management. Tip of the iceberg. Just wait until the scandal about fee paying Accounts gets going.

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Andy via mobile

Feb 05, 2013 at 08:19

Sorry, I meant to say 'retired'

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Solomon

Feb 05, 2013 at 08:22

Interesting that whatever the outcome, it is the tax-payer covering the cost of proceedings, the tax-payer covering the cost of any fines and the tax-payer covering all the redress whilst the wrong-doers have already lined their pockets and gone. Who will gain most from this?

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Hickky

Feb 05, 2013 at 09:40

@ Solomon

The only one I can see is a self centred John Mc Fall who, as a peer and ex chairman of the TSC, wants to re-live past battles. Remember it was under his chairmanship of the TSC that a lot of these so called abuses went on. Did he warn the FSA to do something? Did he even know that these products would be deemed mis-sold by the courts? He is a member of the GMB union, nuff said.

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