UK watchdog fines Lloyds record $46 million for pushing sales
By Huw Jones
LONDON (Reuters) - Britain's financial watchdog imposed a record 28 million pound ($46 million) fine on Lloyds Banking Group for the way it encouraged staff to sell 2 billion pounds of products that customers did not need.
The probe covered the sale of products such as critical illness or income protection between January 2010 and March last year. During this time over a million products were sold to about 700,000 people.
Lloyds sales incentives included the chance to win a one-off payment of 1,000 pounds, known as a "grand in your hand". Another was called the "champagne bonus".
"The findings do not make pleasant reading," said Tracey McDermott, the Financial Conduct Authority's (FCA) director of enforcement.
The FCA was launched in April to try and end Britain's litany of mis-selling scandals in financial products spanning over two decades. The fine was the largest ever imposed on a bank for failings in how it sold products to retail customers.
The penalty was increased by 10 percent because the watchdog's predecessor, the Financial Services Authority, had already warned the bank about poorly managed incentive schemes over a number of years. Lloyds was also fined in 2003 for unsuitable sales of bonds.
"The incentive schemes led to a serious risk that sales staff were put under pressure to hit targets to get a bonus or avoid being demoted, rather than focus on what consumers may need or want," the watchdog said in a statement on Wednesday.
Lloyds had already set aside 8 billion pounds for mis-selling loan insurance and 400 million pounds for mis-sold interest rate swaps. Continued...