U.K. regulators have imposed the penalty on the massive banking group for mishandling of customer complaints.
Lloyds Banking Group recently found itself on the losing end of some insurance news as regulators in the U.K. stated that they had imposed a fine against them, which will come to about $180 million.
The fine is meant to be a penalty against the banking group for mishandling customer complaints.
The insurance news was focused on the way that Lloyds Bank managed the customer complaints that were being filed about a type of loan insurance product that has now led the industry to lose billions of dollars. The bank has now said that its 2015 bonus pool would be slashed as a result of the fines that it will be facing. The regulator that issued and announced the penalty is the Financial Conduct Authority (FCA).
The FCA has called this insurance news the largest retail fine that it has issued in the history of its existence.
The penalty is a part of a larger settlement that has been reached with the lender with regards to the way that customers were unfairly treated after they filed complaints over the span of March 2012 through May 2013 with regards to the dubious sales techniques that were being used to sell payment protection insurance (P.P.I.).
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According to that regulator, a massive 37 percent – more than one in three – complaints were rejected by the bank with regards to the 2.3 million policies of that nature that were sold. These rejections occurred despite the fact that some of those complaints did not undergo a full investigation, and the fact that Lloyds was aware that there was a flaw in some of its processes.
In response, the bank has now decided to implement a decrease of £30 million to its bonus pool this year (the equivalent to about $46 million). Moreover, its senior managers will be forfeiting about £2.65 million in bonuses that have already been awarded to them.
In an insurance news statement from the regulator, it stated that “The size of the fine today reflects the fact that so many complaints were mishandled by Lloyds.”