Lloyds chief loses bonus after fine

Group Chief Executive of Lloyds Banking Group Antonio Horta-Osorio
Group Chief Executive of Lloyds Banking Group Antonio Horta-Osorio
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THE CHIEF executive of Lloyds Banking Group has lost out on £350,000 worth of bonuses after it was hit with a record £117m fine by the City regulator over the way it handled mis-selling complaints.

The Financial Conduct Authority (FCA) found the State-backed group had wrongly denied compensation to customers over payment protection insurance (PPI) – the wider scandal that has already cost Lloyds £12bn.

The fine is the largest ever retail banking penalty imposed by the authority – other larger charges have related to trading scandals such as Libor benchmark rate-rigging and foreign exchange rate manipulation.

Chief executive Antonio Horta-Osorio will miss out on £350,000 in deferred bonuses as a result of the failings which happened on his watch in the period between March 2012 and May 2013.

He is among a number of top executives to be docked payouts totalling £2.65m for the period. They are likely to include Alison Brittain, who is departing as head of Lloyds’s retail division to become boss of Premier Inn and Costa coffee owner Whitbread.

The FCA’s acting director of enforcement and market oversight, Georgina Philippou, said: “If trust in financial services is going to be restored following the widespread mis-selling of PPI, then customers need to be confident that their complaints will be treated fairly.

“The size of the fine today reflects the fact that so many complaints were mishandled by Lloyds. Customers who had already been treated unfairly once by being mis-sold PPI were treated unfairly a second time and denied the redress they were owed. Lloyds’ conduct was unacceptable.”

The fine imposed yesterday will also see the bonus pool for state-backed Lloyds, to be announced next spring, being reduced by £30m. For 2014 the total was £360m. The £350,000 being withheld from Mr Horta-Osorio represents 12 per cent of his payout relating to the period covered by the FCA fine. Pay withheld from members of the wider executive committee averages at about 25 per cent.

The fine relates to a period from March 2012 to May 2013 when the group assessed customer complaints relating to more than 2.3m PPI policies and rejected 37 per cent of those – many of them wrongly. Lloyds apologised to customers affected.

Lloyds has been the worst-hit by the PPI mis-selling scandal, having set aside a total of £12bn out of a running total for the whole industry of £26bn. But now regulators have found the way some lenders handled the fall-out of the scandal was not good enough. In April, the FCA fined Clydesdale Bank £20.7m for failings that meant thousands of PPI complaints might have been rejected unfairly.

Mr Horta-Osorio said: “We made mistakes in our handling of some PPI complaints. I am very sorry for this. We have been working hard with the FCA to ensure all customers receive appropriate redress. That process is now substantially complete. We remain fully committed to improving our operational procedures and ensuring we do the right thing for our customers.”

The fine comes days after the Government announced a £4bn share sale will be launched within the next 12 months as it seeks to sell off more of the taxpayer stake in Lloyds.

Lloyds was rescued by the taxpayer at the height of the financial crisis, but the Treasury’s holding has since been shrunk from 43 per cent to just under 19 per cent as parcels of it have been disposed of on the stock market.