Lloyds Bank PLC

Activities and protection

What they can do, and how you are protected

• Hold or safeguard your money · Handle payments & transfers FSCS may apply
  Eligible deposits are typically protected by the FSCS up to £120,000 per person, per banking group.
• Give regulated advice FSCS may apply
  A claim for unsuitable advice is itself FSCS-protected, up to the limit that applies to the product you were advised on.
• Manage or trade investments FSCS may apply
  Eligible investment and pension claims are typically FSCS-protected up to £85,000 per person, depending on the product and your circumstances.
• Sell or arrange insurance FSCS may apply
  Eligible insurance claims may be FSCS-protected, often 90%, or 100% for compulsory or long-term cover.
• Advise on or arrange mortgages FSCS may apply
  Mortgage advice and arranging may be FSCS-covered, up to the limit that applies.
• Lend or arrange credit · Hire out goods to consumers No FSCS cover
  Consumer credit is not covered by the FSCS, so there is no compensation scheme if the firm fails.

Check your FSCS cover →

Complaints: You can refer a complaint about this firm to the Financial Ombudsman Service for free, whichever activity it relates to.

Track record

Action taken against them, and what customers complained about

6 fines between 2003 and 2020, £320.73m in total. This is part of the official register record and is worth reviewing before going ahead.

• Fined £64.05m on 11 June 2020

  The FCA has taken enforcement action against Lloyds Bank PLC, Bank of Scotland plc, and The Mortgage Business Plc (“the Banks”) because between 7 April 2011 and 21 December 2015 (the “Relevant Period”), the Banks breached Principles 3 and 6 of the Authority’s Principles for Businesses. As a consequence of this action, the Banks received a financial penalty of £64,046,800 pursuant to section 206 of the Act. The Banks agreed to resolve all issues of fact and liability and qualified for a 30% discount under the Authority’s executive settlement procedures. Were it not for this discount, the Authority would have imposed a financial penalty of £91,495,400 on the Banks.     The FCA’s action took effect on 11 June 2020 and a copy of the Final Notice is displayed on the FCA’s web site.

  Read the FCA notice →

• Fined £117.43m on 5 June 2015

  On 4 June 2015, the Authority imposed a financial penalty of £117,430,600 on Lloyds Bank plc, Bank of Scotland plc and Black Horse Limited (LBG) for breaches of Principle 6 (Customers' interests) of the Authority's Principles for Businesses (the Principles). LBG agreed to settle at an early stage of the Authority's investigation. LBG therefore qualified for a 30% (Stage 1) discount under the Authority's executive settlement procedures. Were it not for this discount, the Authority would have imposed a financial penalty of £167,758,035 on LBG. Between 5 March 2012 and 28 May 2013 (the Relevant Period) LBG breached Principle 6 by failing to pay due regard to the interests of its customers, and by failing to treat them fairly when handling complaints from customers who had purchased Payment Protection Insurance ('PPI'). During the Relevant Period LBG assessed customer complaints relating to in excess of 2.3 million PPI policies and rejected 37% of those complaints. In particular: (a) LBG's complaint assessment process included guidance to complaint handlers which directed them to assume that LBG's PPI sales processes were 'compliant and robust', unless notified to the contrary.  This was described to complaint handlers as the 'Overriding Principle'.  The Overriding Principle was unfair to customers because: (i) there was a risk that it created a default assumption that LBG had not mis-sold the PPI policy that an individual customer was complaining about; (ii) customers may not have had the opportunity to provide evidence to enable the complaint handler to reach a fair outcome; and (iii) in some situations it affected the judgements made by complaint handlers who relied on it to rebut credible customer testimony and to not fully investigate customer complaints. (b) LBG failed to take into account information about Sales Process Failings identified from Root Cause Analysis when assessing complaints.  This was unfair to customers because it meant: (i) LBG failed to give balanced consideration to all available evidence; and (ii) the unfair effects of the Overriding Principle were compounded because this evidence was not available to complaint handlers to counter the assumption, created by the Overriding Principle, that LBG had not mis-sold the PPI policy that an individual customer was complaining about. (c) Where LBG complaint handlers relied on the Overriding Principle to reject customer complaints instead of investigating the actual circumstances of the complaint, there was a risk that the final decision letters did not accurately reflect the complaint handler's assessment of the complaint and reasons for the rejection.  This was unfair as it may have dissuaded some customers with valid complaints from providing further information to LBG to challenge the decision, or referring their complaint to the Financial Ombudsman Service. (d) The above failings resulted in a significant number of customer complaints being unfairly rejected. A copy of the Final Notice is displayed on the Authority's web site and can be accessed.

  Read the FCA notice →

• Fined £105m on 28 July 2014

  On 28 July 2014, the FCA imposed on Lloyds Bank plc and Bank of Scotland plc a financial penalty of £105,000,000 (split evenly between the two firms and discounted from £150,000,000 for early settlement) in respect of breaches of Principle 3 and 5 of the FCA's Principles for Businesses. The Firms committed misconduct by breaching Principle 5 and Principle 3 of the Authority's Principles for Businesses through manipulating submissions to two benchmark reference rates, the Repo Rate and LIBOR, in order to seek to manipulate those rates. The Final Notice can be found at the following link.

  Read the FCA notice →

• Fined £28.04m on 11 December 2013

  On 10 December 2013 the FCA imposed a combined financial penalty of £28,038,800 on Lloyds TSB Bank plc and Bank of Scotland plc (the Firms) for breaching Principle 3 of the FCA's Principles for Businesses. The breaches occurred between 1 January 2010 and 31 March 2012 (the Relevant Period). The Firms settled at an early stage of the FCA's investigation. They therefore qualified for a 20% (Stage 2) discount under the FCA's executive settlement procedures. Were it not for this discount, the penalty would have been £35,048,500. The penalty is due to serious failings in the Firms' systems and controls governing financial incentives given to sales staff in LTSB, Halifax and BOS branches. These staff sold protection and investment products to customers on an advised basis (advisers). Advisers' incentives included higher risk features, such as variable salaries and bonus thresholds (giving disproportionate rewards for marginal sales). It meant advisers who met sales targets qualified for substantial salary rises and bonuses, while advisers who did not faced salary reductions. There was also a significant bias towards sales of protection products. There was, therefore, a significant risk that, if not adequately controlled, advisers would make inappropriate sales to customers to reach salary and bonus thresholds. The Firms' systems and controls were not appropriately focused on these specific higher risk features. In particular, the Firms failed to supplement routine business monitoring with appropriately risk-based monitoring that also focused on the risk profile of advisers. Further, while advisers had to meet certain competency standards to be eligible for salary rises and bonuses, this control was flawed as advisers could meet the standards even where the Firms had identified issues with their sales. The Firms' failure to manage and control adequately the risks from advisers' incentives derived from serious deficiencies in their governance over this area. There was a collective failure of the Firms' senior management to identify sufficiently advisers' incentives as a key area of risk requiring specific and robust oversight. The Firms are carrying out a review of sales conducted by higher risk advisers during the Relevant Period, and will provide redress to customers where appropriate.

• Fined £4.32m on 19 February 2013

  On 15 February 2013 the FSA imposed a financial penalty of £4,315,000 on Lloyds TSB Bank Plc, Lloyds TSB Scotland Plc and Bank of Scotland Plc (together Lloyds Banking Group, LBG) by way of a single Final Notice. The penalty relates to LBG's failure to pay redress promptly to PPI complainants between 5 May 2011 and 9 March 2012 (the Relevant Period). LBG agreed to settle at an early stage of the FSA's investigation. It therefore qualified for a 30% (Stage 1) discount under the FSA's executive settlement procedures. Were it not for this discount, the FSA would have imposed a financial penalty of £6,164,327 on LBG. During the Relevant Period, LBG sent 582,206 decision letters to PPI complainants, agreeing to pay redress to them. In order to comply with its regulatory obligation to pay redress promptly, LBG aimed to make payment within 28 days of these decision letters. However, LBG failed to do so in up to 140,209 (24%) cases. 24,589 (4%) cases inadvertently dropped out of LBG's PPI redress payments process, and remedial action had to be taken subsequently to ensure those payments were made. These payments were identified as a result of customers telephoning LBG to chase payments and media attention. Following this, LBG carried out an investigation. LBG breached the FSA's Principles and rules by failing to: 1) take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems (Principle 3); and 2) comply promptly with offers of redress which LBG had made and which had been accepted by PPI complainants (DISP 1.4.1R(5)). In particular: (1) LBG failed to establish an adequate process for preparing redress payments to send to PPI complainants. In addition to a lack of initial planning by LBG, LBG's staff engaged on the redress process did not have the collective knowledge and experience to ensure that the process worked properly; (2) As a result, there were a number of serious deficiencies in LBG's PPI payment preparation framework. These deficiencies related to the way LBG processed data relating to customers' PPI redress payments before this data was sent to the separate payments area. LBG's system was heavily reliant on manual processes and data transfers which could not cope with high volumes of PPI payments of varying complexity. There was ineffective tracking of cases through the process and a lack of co-ordination between multiple redress sites. Customers' payment details were subjected to poor data governance and there was a lack of controls, including no control at all for the reconciliation of PPI payments. In addition, parts of the process were under resourced; (3) LBG failed to monitor effectively whether it was making all payments of PPI redress promptly. Nor did it gather sufficient management information to enable it to identify, in a timely manner, the full nature and extent of the payment failings; and (4) LBG's risk governance framework in respect of its process for preparing redress payments to send to PPI complainants was ineffective. An effective risk function would have assisted LBG to identify and address, in a timely way, the systems and controls deficiencies in its process. As a result of these failings, up to 140,209 (24%) customers whose complaints were upheld in full or in part were not paid redress within 28 days of LBG's decision letters to customers. Approximately 87,000 (15%) of these customers had to wait over 45 days, 56,000 (9.7%) over 60 days, 29,000 (5%) over 90 days and some 8,800 (1%) over 6 months (these have subsequently been paid, other than where they involve exceptional customer circumstances and are still being addressed). Although LBG has taken steps to ensure that these customers have not been financially disadvantaged by the delays by paying interest at 8% per annum on the outstanding redress figure where appropriate, the average redress due to each customer was £2,733 and customers wereonvenienced by the delay. When customers telephoned LBG to enquire about the non-receipt of the payments they had been expecting, the deficiencies in its processes meant that LBG was unable to fast-track the payment to the customer, inform them when payment would be made, or explain why it had been delayed. LBG has since completed a comprehensive reconciliation of its PPI redress payments to ensure that all customers due PPI redress have been correctly paid and compensated for any delay in receiving their payment. Once the deficiencies in its process had been identified, LBG quickly conducted the reconciliation review and improved its processes to address the failings identified in this notice, including the rapid implementation of a PPI payment validation tool intended to ensure that any future issues regarding delayed payments are immediately identified and corrected.

• Fined £1.9m on 24 September 2003

  THE PENALTY 1.1 The FSA gave LTSB a Decision Notice dated 23 September 2003 which notified LTSB that, pursuant to section 206 of the Financial Services and Markets Act 2000 (the Act), the FSA had decided to impose a financial penalty on LTSB in the amount of £1,900,000. 1.2 LTSB has confirmed that it does not intend referring the matter to the Financial Services and Markets Tribunal. 1.3 Accordingly, for the reasons listed below and having agreed with LTSB the facts and matters relied upon, the FSA imposes a financial penalty of £1,900,000 on LTSB (the Penalty). REASONS FOR THE ACTION 2.1 The FSA has decided to impose the Penalty on LTSB in respect of breaches of SIB Adopted Rule S5.01 (the SIB Rule) and Principles 2 and 9 of the Statements of Principle of the Securities and Investments Board (the SIB Principles) arising from the sale of some 51,000 policies of the Extra Income and Growth Plan (EIGP) in four tranches between October 2000 and July 2001. In particular: 2.1.1 the EIGP was a new product with a medium/high risk rating designed by Scottish Widows Group (Scottish Widows) and distributed by the LTSB Branch Network (the Network) shortly after Scottish Widows was acquired by Lloyds TSB Group plc. 2.1.2 LTSB did not have in place sufficiently rigorous procedures and controls for considering all of the issues surrounding the selling of the EIGP, in that LTSB: i) did not emphasise sufficiently to the Network financial consultants the need for investors, when buying the EIGP, to have appropriately balanced portfolios and the need for investors to retain sufficient liquid resources (together concentration levels). In particular: a) there was not sufficiently bespoke guidance on acceptable concentration levels in LTSB's suitability rules in relation to the EIGP; b) there was not sufficiently specific training of Network financial consultants in terms of the suitability of the EIGP for investors on grounds of concentration levels; and c) in the absence of such guidance, the sales verification process did not identify potential unsuitable sales through the Network on grounds of concentration levels. ii) did not ensure an adequate balance between the general pressures of its sales targets and the suitability of EIGP for investors; and iii) failed to analyse the reasons for the high level of sales through the Network of Tranche 1 of the EIGP; 2.1.3 as a result, some 22,500 EIGP sales (44% of the total number of policies sold) were made through the Network to investors when it was an unsuitable product for them and LTSB has agreed, in the circumstances particular to this matter, to pay compensation in respect of: i) approximately 16,500 sales to investors who had not, before their purchase of the EIGP, purchased an equity related investment product and who purchased the EIGP with over 20% of their financial assets; and ii) approximately 6,000 sales to other investors who had, before their purchase of the EIGP, purchased one or more other equity related investment products and who purchased the EIGP with over 35% of their financial assets; 2.1.4 in relation to the EIGP, LTSB failed in the above respects to act with due skill, care and diligence and to have adequate arrangements to ensure that its financial consultants were adequately trained with regard to concentration levels and that it had sufficiently well defined compliance procedures; 2.1.5 in so doing, LTSB has demonstrated serious failings which demand a substantial financial penalty. These failings are viewed by the FSA as particularly serious in the light of the following factors: i) LTSB's failure to ensure that sufficiently adequate procedures and controls were put in place to sell the EIGP throughout the Network occurred notwithstanding that LTSB had clearly identified in advance the potential risk of misselling the EIGP and had put in place a number of measures intended to mitigate those risks; ii) LTSB's failure resulted in the EIGP being missold to a large number of inexperienced investors, exposing them to the risk of substantial loss; iii) specifically, the failings in respect of certain EIGP sales meant that: · approximately 84% of the total number of sales to customers who had no previous experience of equity related investment products resulted in such customers having over 20% of their total financial assets invested in the EIGP; and · approximately 18% of the total number of sales to customers who did have previous experience of equity related investment products resulted in such customers having over 35% of their total financial assets invested in the EIGP; 2.1.6 in deciding the level of penalty to be imposed, the FSA has recognised that these failings have been mitigated by LTSB. In particular: i) LTSB has co-operated fully with the FSA since the identification of these issues by the FSA in October 2001; ii) LTSB has conducted a comprehensive investigation into its sales of the EIGP; iii) LTSB has agreed to pay the compensation referred to in paragraph 2.1.3, at a total cost of approximately £98 million in respect of approximately 22,500 sales; iv) LTSB's conduct was not deliberate or reckless; and v) LTSB has put in place remedial steps to address the issues in relation to the EIGP referred to above. 2.2 It appears to the FSA having regard to its statutory objectives, which include the protection of consumers, that, in the circumstances, £1,900,000 is an appropriate financial penalty. Were it not for the remedial action taken by LTSB and for the co-operation demonstrated by LTSB resulting in the early settlement of the matter, the Penalty would have been significantly higher.

Common questions

Frequently asked questions