Lloyds bosses are giving up bonuses over record PPI fine

It's one step along the long road to rebuilding its reputation - actions speak louder than words.

by Rachel Savage
Last Updated: 02 Oct 2015

PPI is the scandal that just keeps giving – or taking if you’re a bank. It’s Lloyds’ turn to feel the wrath of the Financial Conduct Authority today, with a record £117m fine, not for the original misselling but for badly handled complaints.

It comes less than two months after Clyesdale Bank was handed a £20.7m penalty for a similar offence. Lloyds has already set aside an eye-watering £12bn to cover PPI claims. Although that’s not necessarily all been paid out it’s still likely to make up a huge chunk of the £19.2bn given back to customers by British banks since January 2011.

The bank, which is still 19% taxpayer-owned (although George Osborne is doing his darndest to get rid of that stake), handled 2.3 million complaints between March 2012 and May 2013, rejecting 37% of them. But the FCA said ‘a significant number of customer complaints were unfairly rejected,’ after call-centre staff were told they should handle them on the basis that Lloyds’ PPI sales process was ‘compliant and robust’ when it clearly wasn’t.

Chief executive António Horta-Osório was duly contrite. ‘Whilst our intentions were right, we made mistakes in our handling of some PPI complaints. I am very sorry for this… We remain fully committed to improving our operational procedures and ensuring we do the right thing for our customers.’

But he’s clearly figured out actions speak louder than words – after all, how many apologies have we now heard from bank bosses for PPI, Libor-fixing, forex-fiddling and, of course, the financial crisis? Lloyds senior executives are giving up £2.65m in bonuses and £30m is being cut from the bank’s total bonus pool, which was £369.5m in 2014. Horta-Osório got a tasty £11.5m last year, so probably won’t be too sad about the £350,000 he is reportedly forfeiting due to the PPI debacle.

Of course, the ideal way to rebuild trust would be for all the scandals and fines to end, so the banks can’t get on with their job of greasing the wheels of the economy with lending. But at least Lloyds is doing something, rather than repeating the T Word ad-infinitum.

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