Lloyds Banking Group Plc (LLOY), Britain’s biggest mortgage lender, was fined a record 28 million pounds ($46 million) by the Financial Conduct Authority for “serious failings” in controls over how it rewarded sales teams.
The penalty follows an investigation of branches of Lloyds TSB, Bank of Scotland and Halifax from January 2010 to March 2012, the U.K. regulator said in a statement today.
“Incentive schemes led to a serious risk that sales staff were put under pressure to hit targets to get a bonus or avoid being demoted,” the FCA said. “In one instance an adviser sold protection products to himself, his wife and a colleague to prevent himself from being demoted.”
Lloyds’s financial recovery, which saw the government sell 3.2 billion pounds of shares in the lender at a profit in September, has been blighted by past regulatory mistakes. The bank has earmarked about 8.1 billion pounds to compensate customers sold payment protection insurance that didn’t cover them or they didn’t need, more than any other U.K. bank.
“The group recognizes that its oversight of these particular schemes during the period in question was inadequate and apologizes to its customers for the impact that they may have had,” Lloyds said in a separate e-mailed statement. “We are determined to ensure that any customer impacts are dealt with quickly and fully.”
The penalty is the largest imposed by the FCA relating to consumer conduct failings.
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