Because of ‘serious failings’ in its compensation plans for executives, Lloyds Banking Group faces a record-breaking £28 million fine. The bank reportedly gave over £365 million to its top executives in its most recent round of bonuses, prompting extreme anger from consumers affected by its massive PPI insurance mis-selling scandal.
Consumers aren’t the only ones annoyed with Lloyds for its involvement in massive insurance mis-selling and aggressive fees – analysts have called the £28 million fine a “slap on the wrist” for the bank, despite its record-breaking status. The large fine is for Lloyds’ “retail conduct failures” and is one of many penalties aimed at the bank.
The PPI insurance mis-selling scandal has been one of 2013’s big financial headlines, with established banks attracting immense criticism and large fees for their role in a massive fraud operation. Analysts believe that the mis-selling scandal is simply part of a culture of aggressive incentives that has been going on at Lloyds for decades.
In September of last year, newspapers reported that Lloyds had implemented a new compensation scheme for employees that sold additional products to customers. In the months that followed, consumer group Which? discovered that almost half of all banking employees (at both Lloyds and other banks) were aware of misleading and illegal tactics used to sell additional services to customers.
Between 2006 and December 2011, Lloyds sold 255,420 “structured product” to its network of customers. Many of those targeted in the mis-selling effort included 80-year-old pensioners who, after witnessing the instability of the stock market, could not afford traditional investments and were largely unaware of the way the bonds worked.
The immense scale of the mis-selling scandal and the relatively tiny amount Lloyds faces in fines make the £365 million awarded in bonuses to top Lloyds executives a serious concern for consumers and investors that placed their trust in the bank.
