Lloyds fined £117m over PPI handling

5th Jun 2015 07:13

Lloyds Banking Group has been fined £117m by the Financial Conduct Authority for mishandling compensation payouts for mis-sold payment protection insurance between March 2012 and May 2013.As a result, the bank said it will reduce bonuses paid to staff by around £30m.Lloyds apologised to customers who were affected and said it accepts that part of its complaint handling process led to a failure to provide fair outcomes for a significant number of customers.The bank, which is part-owned by the government, has already set aside around £12bn in PPI-related compensation and administration charges.Lloyds chairman Lord Blackwell said: "Since 2011 the group has made significant progress to strengthen the business. We are trying to get it right for our customers and to rebuild trust.""But we do not get everything right. That means when we make mistakes, we will take responsibility for them. This is what we have done here. The board remains fully committed to ensure everyone at Lloyds Banking Group puts customers at the heart of our business."Commenting on the news, Investec said: "We would argue that this amount is de minimis in the context of Lloyds' cumulative £12bn provision for customer redress and associated administration costs.""The (qualified) good news is that the incremental cost of compensating those customers whose claims were accidentally mishandled is believed by Lloyds to be low," said Investec. "We interpret today's statement to imply only low hundreds of millions for this issue, to be charged in the second quarter of 2015," it added.Investec continues to believe that Lloyds shares offer modest absolute downside and keeps the stock at 'sell'.