LLOYDS BANKING GROUP WHY WERE THEY FINED £115 MILLION
We hear little of the Chief Executive of the Lloyds Group these days on PPI matters. He appears to be doing a very good job in all other areas. When he originally took his post he was exceedingly critical of Claims Management Companies. Indeed, he suggested elements of dishonesty. It has always baffled me how anyone intimating themselves, or using a Claims Management Company or Solicitor Company to intimate a PPI claim could be described as being potentially fraudulent. If a Policy did not have the product it would be refused. If the product had PPI and the Bank were of the opinion it was fairly sold how could anyone suggest the intimation was fraudulent.
There are no doubt people that sold PPI have lodged claims when they frankly hadn’t a clue what was going on. There are no doubts at all that people who have no idea whether they had PPI have intimated claims. In many respects this goes to the route of this grossly mis-sold product. Lack of discussion with or information provided to the consumer.
With regards to the fine on the Lloyds Banking Group, this related to Lloyds Bank plc., Bank of Scotland plc., and Black Horse Limited. This related only to the method by which they treated customers, unfairly when handling Payment Protection Insurance complaints. Between March 2012 and March 2013.
It was estimated that during that period 2.3 Million PPI Policies were investigated and some 37% of the complaints were rejected at first instance. The requirement from the Financial Conduct Authority is that Firms assess these complaints impartially are naturally allowed to reject unfounded claims (In other words the culprit Organisation is to act as an impartial Judge & Jury).
However, in March 2012 the guidance to Lloyds instructing complaints handlers at Lloyds was that the overriding principal when assessing complaints was that Lloyds PPI sales process was compliant and robust unless told otherwise. They described this as “the Overriding principal”. Much of this was brought to light by an article in the Sunday Times some years ago. In short, a Sunday Times Reporter obtained a job at the Lloyds Complaint Unit and ascertained how they dealt unfairly with these complaints.
It was accepted by the Financial Conduct Authority that some Complaint Handlers relied on this overriding principal to dismiss customers’ personal complaints and accounts of what had happened during the PPI sale or indeed did not fully investigate them. In many cases Lloyds who were meant to contact customers to check over their version of events did not do so.
At the time, it was commented by the Financial Conduct Authority that “The size of the fine today reflects the fact today that so many complaints were mishandled by Lloyds. Customers who have already been treated unfairly once by being sold PPI were treated unfairly a second time and denied the redress they were owed. Lloyds conduct was unacceptable”. Examples of how customers lost out as a result of the Lloyds failings included:-
- Complaint Handlers justified the decision to reject customers’ complaints on the basis that the sales process used by Lloyds was robust, as directed by the Overriding principals. This was when Lloyds knew there was significant process failures and indeed mis-selling.
- Some consumers had their complaints rejected on the basis they had been “fully investigated” with “appropriate weight and balance consideration given to all available evidence”. This was not the case.
- A customer’s account of what had actually happened was not always considered in a balanced way. The evidence of the Bank paperwork was preferred.
- Due to poor contact of the consumer, or indeed no contact some customers who clearly would have provided further evidence were not given that opportunity.
Since that date the Financial Conduct Authority has appointed an Independent body to oversee the remediation process. However, this was over 2 years ago. We are still receiving information that the remedial process is still underway. The obvious concern for any consumer is that whereas they are advised to simply “sit back and await for the Bank to re-look at cases” there is now a time bar. For how long do clients sit and wait?
As a subscript to this post, as recently as 22nd July 2017 the Guardian newspaper reported Lloyds Banking Group will take another hit from payment protection insurance mis-selling this week, taking its bill for the scandal close to £18bn.