Lloyds fined £4m for payment hold-ups
Lloyds Banking Group (LLOY) has been fined £4.3 million for delaying compensation payments to customers over Payment Protection Insurance (PPI) mis-selling.
It has become the first bank to be fined by the Financial Services Authority (FSA) specifically for delaying payments. The FSA said up to 140,000 customers did not receive their compensation promptly.
Lloyds apologised for the delay, saying it had been surprised by the influx of claims last year.
"We had not fully anticipated the volume of complaints to be processed at the outset and experienced some administrative errors as we scaled up our systems and processes," said a spokesman for the bank.
"We acknowledge that this led to some customers not being compensated on time and we apologise to those customers whose payments were delayed."
Craig Lowther, managing director of the PPI claims management company MoneyBoomerang, stated the fine was recognition of the frustration felt by thousands of Lloyds customers whose claims were stuck in the pipeline.
"The reality is that far too many Lloyds customers who were mis-sold PPI are being confronted with a monolithic and inefficient bureaucracy when they approach the bank for redress," he commented. "Despite assigning thousands of staff and millions of pounds just to handle a mountain of outstanding PPI claims, the bank clearly isn't keeping up."
Lloyds is expected to report its fourth-quarter results on 1 March.
Chris Manners, analyst at Morgan Stanley, was "cautious" ahead of the results. "We still expect pressure on net interest income as loan balances shrink, with margins stable, which could disappoint some expecting strong margin expansion," he commented.
"We are equal-weight as tail risks from funding and asset quality appear much reduced so we expect a continued focus on 'core' earnings power [from 2015 onwards]."
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