The Competition and Markets Authority has revealed Bank of Scotland owner Lloyds Banking Group has committed "substantive breaches" of regulations surrounding Payment Protection Insurance (PPI).
It said in a letter to the group, published today, that the bank had breached the Payment Protection Insurance Market Investigation Order on three occasions.
The issues relate to LBG’s failure to issue Annual Reviews to some PPI customers and also relate to some Annual Reviews containing incorrect data.
In a letter to Simon Laesser, senior manager of PPI Live Book at Lloyds Banking Group, Alistair Thompson, director of remedies, business and financial analysis at the CMA, warned that the breaches could "potentially harm customers’ interests".
He wrote: "We have been in discussion with Lloyds Banking Group (‘LBG’) regarding several substantive breaches of the Payment Protection Insurance Market Investigation Order 2011 and the steps LBG has taken to remedy these.
"LBG reported a number of non-compliance issues in its 2016 Compliance Report to the CMA, of which we consider three issues to be substantive breaches. LBG also reported non-compliance issues in advance of inclusion in the next Compliance Report due in April 2017."
The letter stated that Lloyds Banking Group will send or has already sent apology letters to customers affected by two of the issues - incorrect figures on customers's mortgage annual review docuemnts and that mortgage annual review statements had not been issued.
In the case of the most substantive breach of the order - that customers who had opted out of increased PPI premiums had still been charged more - the CMA said customers had been refunded overcharged premium amounts plus eight per cent interest, while manual checks had been put in place to make sure it did not happen again.
A spokeswoman for Lloyds Banking Group said: "We have informed the CMA of issues regarding compliance with the PPI Order during the period from 2012 to 2016. These issues have since been resolved. Nonetheless, we apologise for any inconvenience caused."