Lloyds CEO Said to Face $536,000 Bonus Cut After Record FCA Fine

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Lloyds Banking Group Plc’s Chief Executive Officer Antonio Horta-Osorio will have his bonus cut by 350,000 pounds ($536,000) after the lender was fined for mishandling customer complaints, a person with knowledge of the matter said.

The CEO, who was the highest-paid U.K. bank boss in 2014, is among senior executives who will forfeit a total of 2.65 million pounds, said the person, who asked not to be identified because the decision isn’t public. The London-based lender said on Friday that it will cut its bonus pool for 2015 by about 30 million pounds, or about 8 percent of last year’s total.

Lloyds was fined a record 117 million pounds by Britain’s Financial Conduct Authority over failings in how it handled customer complaints related to wrongly sold payment-protection insurance. Britain’s largest mortgage provider has made 12 billion pounds of provisions to compensate customers affected by the PPI scandal, the highest of any lender, with a total of 19 billion pounds paid out across the industry.

“Whilst our intentions were right, we made mistakes in our handling of some PPI complaints,” Horta-Osorio said in the statement. “We have been working hard with the FCA to ensure all customers receive appropriate redress.”

Horta-Osorio saw his total compensation rise by 54 percent to 11.5 million pounds last year, after he returned the state-owned lender to its first annual profit in five years. Lloyds paid 369.5 million pounds in bonuses in 2014.

PPI Complaints

The BBC reported the impact on Horta-Osorio’s bonus earlier on Friday. A spokesman for Lloyds declined to comment.

The FCA began investigating the way Lloyds handled PPI “as a result of a substantial decline in the proportion of complaints upheld” between March and October 2012, it said in a statement on Friday. The investigation found that complaint handlers rejected claims, saying that Lloyds’s sales process “was robust,” while the bank was fully aware of failures.

“We have subsequently had our complaints handling process quality assured by an independent third party,” Martin Dodd, customer services director at Lloyds, said in the statement. “Once we understood the issue we reviewed our processes and procedures and began to remediate all impacted customers.”

Grievances related to PPI products make up most of bank customers complaints, according to the FCA. Lloyds agreed to settle at an early stage of the investigation, qualifying for a 30 percent discount on the fine, the watchdog said.

Clydesdale Bank Plc was fined 20.7 million pounds by the FCA in April for failings in handling PPI complaints.

Lloyds said it reviewed all customer complaints, with more than 90 percent of them having received compensation.