LLOYDS Banking Group boss Antonio Horta-Osorio has been stripped of £350,000 in bonuses after the City regulator slapped a record £117 million fine on the lender today over its handling of mis-selling complaints.
Horta-Osorio apologised in a statement from the taxpayer-supported bank after the Financial Conduct Authority (FCA) ruled that Lloyds had wrongly denied compensation to customers over the payment protection insurance (PPI) scandal.
The chief executive will miss out on £350,000 in deferred bonuses as a result of the failings, which happened on his watch between March 2012 and May 2013.
The bank said it had decided not to pay senior management £2.65m worth of bonuses covering the period, including Horta-Osorio, who picked up £11.5m in remuneration last year.
Executives likely to miss out are thought to also include Alison Brittain, who it was recently announced was leaving Lloyds to become chief executive of Whitbread, the owner of the Costa Coffee retail chain.
Today’s penalty will also see the wider bonus pool for Lloyds, to be announced next spring, cut by £30m. For 2014 the total was £360m.
Georgina Philippou, acting director of enforcement and market oversight at the FCA, said: “The size of the fine 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.”
Philippou added that bank customers needed to be confident complaints would be treated fairly if trust in the financial services industry was to be restored mis-selling scandals.
The FCA found that in March 2012 Lloyds issued guidance to complaint handlers that their main principle when assessing complaints should be that sales processes “were compliant and robust unless told otherwise”. This resulted in some of them dismissing customers’ personal accounts of what had happened to them during the PPI sale.
In addition, the bank did not notify complaint handlers of known failings that had been identified in its sales process. Some customers were told that their complaint had been “fully investigated” when this was not the case.
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.”
Lloyds, which owns Bank of Scotland and Scottish Widows, has been hit worst by the PPI mis-selling scandal, having set aside a total of £12 billion out of a running total for the whole industry of £26bn.
In April, the FCA fined Clydesdale Bank £20.7m for failings that meant thousands of PPI complaints might have been rejected unfairly. Clydesdale is due to float on the London Stock Exchange later this year.
Lloyds was rescued by the state at the height of the financial crisis, but the Treasury’s holding has since been shrunk to just under 19 per cent from an initial 43 per cent.
• The government may accelerate plans to start selling shares in Royal Bank of Scotland, possibly as early as September, to avoid a sale clashing with the final selloff of its Lloyds stake in March 2015, it was reported yesteday.
Banking sources said a sale of a tranche of RBS shares worth up to £5bn was feasible.