Lloyds Banking Group has been fined a record £28 million after the UK’s financial regulator uncovered “serious failings” in its bonus schemes that put pressure on sales staff to hit targets or avoid being demoted.
The Financial Conduct Authority (FCA) said a lack of control of incentive schemes for advisers within Lloyds TSB, Bank of Scotland and Halifax risked customers being sold products that were unsuitable or not needed.
It added that in one instance, an adviser sold insurance products to himself, his wife and a colleague to prevent himself being demoted.
The penalty — the largest ever imposed by the FCA for retail conduct failings — was increased by 10 per cent as Lloyds ignored repeated industry warnings from regulators over incentive schemes, while it had also been fined before for unsuitable bond sales 10 years ago, caused in part by pressure to meet sales targets.
Tracey McDermott, the FCA’s director of enforcement and financial crime, said: “The findings do not make pleasant reading.” She added: “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.”
The fine comes after a review by the FCA's predecessor, the Financial Services Authority (FSA), of sales bonus schemes in the banking industry.
PA
