Request a Demo Today

Release Date: 15th February 2013

To access the original FSA document, click here.


Lloyds Banking Group (LBG), including Lloyds TSB Bank Plc, Lloyds TSB Scotland Plc, and Bank of Scotland plc, was fined £4,315,000 by the Financial Services Authority (FSA) for failing to promptly pay redress to customers who complained about their Payment Protection Insurance (PPI). Originally, the fine was set at £6,164,327, but LBG received a 30% reduction for agreeing to settle early in the FSA’s investigation.

The fine was imposed due to LBG’s inadequacies in handling PPI redress payments from May 2011 to March 2012. During this period, despite agreeing to pay redress to 582,206 complainants, LBG failed to make these payments within the agreed 28 days in 140,209 cases (24% of the total). Delays were substantial, with significant numbers of customers waiting more than 45 days, and in some cases, over six months.

Key failings included:

As part of the remedial actions, LBG implemented improved processes including a PPI payment validation tool to prevent future delays and ensure compliance. It also completed a comprehensive reconciliation to confirm all due redress was paid, including compensating for delays.

The key takeaways for other firms to avoid similar sanctions include:

This case underscores the importance of organisational efficiency and strict adherence to regulatory standards in handling customer redress, especially in high-volume and complex cases like PPI.

Back to the Dear CEO letter archives.