Lloyds Banking Group fined £4.3m for delaying PPI compensation and losing details of 25,000 claims

Lloyds Banking Group has been fined £4.3million today by the City watchdog for making thousands of  victims of payment protection insurance mis-selling wait more than six months for compensation.
Failings in Lloyds TSB, Lloyds TSB Scotland and Bank of Scotland systems and controls resulted in up to 140,000 customers suffering delays for compensation on payment protection insurance (PPI) which was mis-sold alongside credit cards.
Between May 2011 and March 2012, Lloyds sent 582,206 decision letters to PPI complainants agreeing to pay redress.

PPI failings: The banking group has been fined by the FSA for being too slow when it came to paying out PPI compensation

FSA rules state that compensation must be paid promptly after a decision is made and Lloyds aimed to make payments within 28 days of the letters it had sent out.

However, in total over 140,209 customers – nearly a quarter – received their payments after this 28 day window.
Around 87,000 had to wait over 45 days, 56,000 of these over 60 days and 29,000 of those over 90 days. The worse affected were 8,800 customers who had to wait over six months.

Of the total, 24,589 payments 'inadvertently dropped out of the process', the FSA said. Lloyds had to take action to ensure the payments were made.  The payments were identified as a result of customers calling to chase payment and media attention.
When customers telephoned Lloyds to enquire about the non-receipt of expected PPI redress payments, deficiencies in its process meant it was unable to fast-track the payment to the customer, inform them when payment would be made, or explain why it had been delayed.
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 Lloyd’s own failings and the least customers can now expect is that redress, when it is due, will be paid promptly.
‘In short, Lloyd’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. All regulated firms must treat those who complain fairly and that includes paying redress promptly when it is due.
‘PPI is an area of continuing focus for the FSA and we continue to monitor how firms handle complaints and pay redress.’
The FSA says the High Street banking group has since completed a comprehensive review of PPI payments to ensure that all customers have been paid the correct amount and compensated for any delay in receiving their payment.
It has also paid interest at eight per cent on the outstanding redress figure and the FSA said it has since improved its processes to address the failings.
Lloyds agreed to settle with the FSA at an early stage of the investigation so qualified for a 30 per cent discount. Without the discount it would have been fined over £6million.
The fine is far larger than the £100,000 the City watchdog issued to Co-operative Bank in January for failing to 'handle PPI complaints fairly’.