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11/12/2013
Lloyds Bank Fined A Record £28m
Lloyds Banking Group has been fined a record £28m for "serious failings" in relation to its bonus schemes for sales staff.
The Financial Conduct Authority (FCA), which issued the fine, said it is the largest fine it or the former Financial Services Authority (FSA) had imposed for retail conduct failings.
In a statement, the FCA said the incentive schemes placed sales staff under pressure to hit targets in order to get a bonus, or risk being demoted, rather than focusing on what consumers may need or want. In one case, an adviser was found to have sold protection products to himself, his wife and a colleague to prevent himself from being demoted.
Commenting on the findings, Tracey McDermott, the FCA's director of enforcement and financial crime, said: "The findings do not make pleasant reading. Financial incentive schemes are an important indicator of what management values and a key influence on the culture of the organisation, so they must be designed with the customer at the heart.
"The review of incentive schemes that we published last year makes it quite clear that this is something to which we expect all firms to adhere.
"Customers have a right to expect better from our leading financial institutions and we expect firms to put customers first – but firms will never be able to do this if they incentivise their staff to do the opposite.
"Because there have been numerous warnings to the industry about the importance of managing incentives schemes, and because Lloyds TSB had been fined in 2003 for unsuitable sales of bonds, we have increased the fine by 10%."
The FCA said the failings affected branches of Lloyds TSB, Bank of Scotland and Halifax, adding that both Lloyds TSB and Bank of Scotland have made "substantial changes, and the reviews of sales and the redress now being made should right many of these wrongs."
The firms had agreed to review sales of investment products by financial advisers and "pay redress where unsuitable sales took place", it concluded.
(JP/IT)
The Financial Conduct Authority (FCA), which issued the fine, said it is the largest fine it or the former Financial Services Authority (FSA) had imposed for retail conduct failings.
In a statement, the FCA said the incentive schemes placed sales staff under pressure to hit targets in order to get a bonus, or risk being demoted, rather than focusing on what consumers may need or want. In one case, an adviser was found to have sold protection products to himself, his wife and a colleague to prevent himself from being demoted.
Commenting on the findings, Tracey McDermott, the FCA's director of enforcement and financial crime, said: "The findings do not make pleasant reading. Financial incentive schemes are an important indicator of what management values and a key influence on the culture of the organisation, so they must be designed with the customer at the heart.
"The review of incentive schemes that we published last year makes it quite clear that this is something to which we expect all firms to adhere.
"Customers have a right to expect better from our leading financial institutions and we expect firms to put customers first – but firms will never be able to do this if they incentivise their staff to do the opposite.
"Because there have been numerous warnings to the industry about the importance of managing incentives schemes, and because Lloyds TSB had been fined in 2003 for unsuitable sales of bonds, we have increased the fine by 10%."
The FCA said the failings affected branches of Lloyds TSB, Bank of Scotland and Halifax, adding that both Lloyds TSB and Bank of Scotland have made "substantial changes, and the reviews of sales and the redress now being made should right many of these wrongs."
The firms had agreed to review sales of investment products by financial advisers and "pay redress where unsuitable sales took place", it concluded.
(JP/IT)
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A £7.4 million fine has been imposed on insurers Swinton for the mis-selling of add-on insurance policies. The firm will also have to set aside some £11 million to compensate customers. The fine, the largest of its kind, comes just days after an announcement by the Financial Conduct Authority (FCA) that it would investigate the add-on market.
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