The Financial Conduct Authority has fined the Lloyds Banking Group a record fine of nearly £200 million for failing to treat PPI claims in a fair manner.
The record fine of over £100 million came after an investigation by the city watchdog into PPI complaints handling by the bank. The investigation focused on the period between March 2012 through to May 2013 when the group’s complaint uphold rate dropped from 82% down to 26%.
Investigators have attributed the dramatic decline in the upholding of customer complaints to a series of unacceptable practises. These practices meant that Lloyds were unable to treat PPI claims fairly. The FCA also discovered that information was withheld from complaints handlers that would have led to much more accurate investigations.
According to the FCA, Lloyds told their claims handlers that sales of Lloyds PPI were always compliant unless there was evidence showing otherwise.
Claims handlers were also told to make only reasonable attempts to contact customers when further information was needed to make a final decision on compensation. This meant that if a customer was uncontactable after several attempts then their claim would be rejected.
FCA investigators estimate that over 800,000 claims were rejected without sufficient justification due to the groups unfair practices. But, it could have been a lot less if Lloyds had provided their claims handlers with enough information about known PPI failings, including the automatic “opt-in” box for online credit applications and the failure of Lloyds sales advisors to check the suitability of the insurance product for their customers.