Lloyds hit with record fine over sales incentive scheme

11th Dec 2013 10:34

Lloyds Banking Group has been fined 28m pounds by UK regulators for "serious failings" relating to a staff bonus scheme. The scheme rewarded sales staff with bonuses even when products they sold customers were considered unsuitable. The Financial Conduct Authority (FCA), which was launched in April, said it was the biggest penalty it has handed down for retail conduct failings. The watchdog said the bonus scheme put the sales team under pressure to meet targets or risk being demoted. The scheme related to the sale of investment products such as stocks and share Isas and insurance protection products to retail customers."The findings do not make pleasant reading," said FCA director Tracey McDermott."In one instance, an adviser sold protection products to himself, his wife and a colleague to prevent himself from being demoted," the FCA said.The investigation found that the failings affected branches of Lloyds TSB, Bank of Scotland and Halifax.McDermott said the fine against Lloyds was raised because the company ignored repeated industry warnings from regulators over incentive schemes.Lloyds Banking Group released a statement apologising for incident. "The group has already commenced a review to address potential customer impacts that may have occurred as a result of these failings," it said."We are already contacting customers, and will continue to contact potentially affected customers over the coming months. Customers do not need to take any action at this stage to be included in the review and they will be contacted in due course."The cost of the enforcement and the review is not expected to have a material impact on the bank, Lloyds added. Shares fell 0.24% to 328.60p at 10:54 on Wednesday.RD