In a record judgement by the City watchdog, Lloyds Banking Group has been fined £117 million (€159 million) for its mishandling of payment protection insurance (PPI).
This comes after the government announced that it would be launching sales of shares in Lloyds to the public within the next year.
In the Conservatives’ pre-election pledge, they said investors would be able to apply for between £250 and £10,000 of shares and, if the shares are held for a year or more, receive a bonus of one extra share for every ten held, subject to a cap of £200 of bonus shares for each individual investor. Further press reports have also suggested the shares could be bought by investors at a discount to the market price. 14% of DIY investors already hold Lloyds shares.
This latest PPI fine relates to the manner in which Lloyds advised its own staff to deal with customers requesting PPI refunds. Staff were informed that the bank’s processes were compliant with regulations, leading to what the FCA noted as “a significant number of customer complaints” being unfairly rejected.
The FCA will be overseeing Lloyds’ rectification of these issues.