Lloyds has apologised after the Financial Services Authority (FSA) issued fines totalling £4,315,000 to three of its firms for failings in their systems and controls which delayed payment protection insurance (PPI) compensation.
Up to 140,000 customers were affected by the failings, and Lloyds said that since these came to light it has beefed up its systems.
'We acknowledge this led to some customers not being compensated on time and we apologise to those customers whose payments were delayed,' the bank said.
'All customers who were due redress during the review period have now been paid in full.'
The FSA found the following five failings at three Lloyds Banking Group firms:
1. Lloyds' firms failed to establish an adequate process for preparing redress payments to send to PPI complainants, including a lack of planning and its systems were unable to process the huge volumes of PPI redress payments it needed to;
2. Staff did not have the knowledge and experience to ensure the process worked properly;
3. There was ineffective tracking of PPI redress payments, and until 9 March 2012, there was no control at all for the reconciliation of PPI redress payments;
4. Lloyds' firms failed to monitor effectively whether it was making all PPI payments promptly and did not gather sufficient management information to enable it to identify, in a timely manner, the full nature and extent of the payments failings; and
5. Firms' approach to risk management when preparing redress payments was found to be ineffective.
Tracey McDermott, the FSA’s director of enforcement and financial crime, said that when it came to PPI, the industry had already let customers down badly, and the least these clients could now expect was prompt payment of redress.
'In short, LBG’s 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,' McDermott said.
'All regulated firms must treat those who complain fairly and that includes paying redress promptly when it is due,' McDermott added.