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| Lloyds Banking Group fined record £28m in new mis-selling scandal | Lloyds Banking Group fined record £28m in new mis-selling scandal |
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| Lloyds Banking Group has been fined a record £28m by regulators for "serious failings" that led to advisers selling unsuitable financial products in pursuit of bonuses to up to 700,000 customers. | Lloyds Banking Group has been fined a record £28m by regulators for "serious failings" that led to advisers selling unsuitable financial products in pursuit of bonuses to up to 700,000 customers. |
| The Financial Conduct Authority said staff were focused on hitting sales targets, rather than serving customers, in the latest in a series of scandals to hit the banking industry after PPI mis-selling and Libor rigging. | The Financial Conduct Authority said staff were focused on hitting sales targets, rather than serving customers, in the latest in a series of scandals to hit the banking industry after PPI mis-selling and Libor rigging. |
| The FCA said banking sales staff were put under pressure between January 2010 and March 2012 to hit targets to get a bonus or avoid being demoted, rather than focus on what the customer needed. In one case a sales adviser sold financial protection products to himself, his wife and a colleague in an attempt to avoid being demoted. Advisers at Halifax and Bank of Scotland had the chance to get a one-off payment of £1,000 – "a grand in your hand" for hitting sales targets, while at Lloyds TSB staff could get a "champagne bonus" of 35% of their monthly salary for meeting a quota. | |
| The regulator fined Lloyds TSB £16.4m and Bank of Scotland £11.6m – both banks are part of the Lloyds Banking Group. | The regulator fined Lloyds TSB £16.4m and Bank of Scotland £11.6m – both banks are part of the Lloyds Banking Group. |
| It said that up to 700,000 customers who bought share ISAs and illness or income protection products could be affected. | It said that up to 700,000 customers who bought share ISAs and illness or income protection products could be affected. |
| The FSA increased the fine by 10% because the industry had received "numerous warnings" over incentive schemes, although the fine could have been 20% higher if the bank had not reached an early settlement. Customers may be entitled to compensation, although investigators are still assessing how many people were sold unsuitable products. | The FSA increased the fine by 10% because the industry had received "numerous warnings" over incentive schemes, although the fine could have been 20% higher if the bank had not reached an early settlement. Customers may be entitled to compensation, although investigators are still assessing how many people were sold unsuitable products. |
| Tracey McDermott, the FCA's director of enforcement and financial crime, said: "The findings do not make pleasant reading. Financial incentive schemes are an important indicator of what management values and a key influence on the culture of the organisation, so they must be designed with the customer at the heart. The review of incentive schemes that we published last year makes it quite clear that this is something to which we expect all firms to adhere. | Tracey McDermott, the FCA's director of enforcement and financial crime, said: "The findings do not make pleasant reading. Financial incentive schemes are an important indicator of what management values and a key influence on the culture of the organisation, so they must be designed with the customer at the heart. The review of incentive schemes that we published last year makes it quite clear that this is something to which we expect all firms to adhere. |
| "Customers have a right to expect better from our leading financial institutions and we expect firms to put customers first – but firms will never be able to do this if they incentivise their staff to do the opposite. Because there have been numerous warnings to the industry about the importance of managing incentives schemes, and because Lloyds TSB had been fined in 2003 for unsuitable sales of bonds, we have increased the fine by 10%. | "Customers have a right to expect better from our leading financial institutions and we expect firms to put customers first – but firms will never be able to do this if they incentivise their staff to do the opposite. Because there have been numerous warnings to the industry about the importance of managing incentives schemes, and because Lloyds TSB had been fined in 2003 for unsuitable sales of bonds, we have increased the fine by 10%. |
| "Both Lloyds TSB and Bank of Scotland have made substantial changes, and the reviews of sales and the redress now being made should right many of these wrongs." | "Both Lloyds TSB and Bank of Scotland have made substantial changes, and the reviews of sales and the redress now being made should right many of these wrongs." |
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