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Lloyds Banking Group has been fined £64m for failing to support customers who were struggling to pay their mortgage.
About £300m in compensation has been paid to the 526,000 customers who were failed by Britain’s biggest bank. In some cases, homeowners were placed into payment plans which were unsuitable for their circumstances.
The problem affected customers of Lloyds Bank, Bank of Scotland and The Mortgage Business. Homeowners who paid unnecessary mortgage arrears fees have had these charges returned with interest.
The City watchdog, the Financial Conduct Authority, issued the fine and said that between April 2011 and December 2015 the bank had failed to obtain correct information from struggling borrowers. This created a risk that customers would not be treated fairly.
Lloyds’ systems were also set up in a way that call centre staff may have failed to offer appropriate payment arrangements to customers who had fallen behind with their payments.
The problems were exacerbated when a large number of staff left their roles as part of a corporate restructure and the replacement staff lacked sufficient expertise to deal with issues, the regulator said.
Failings were identified in 2011 and 2013 but on both occasions Lloyds failed to rectify the issues fully. The FCA stepped in July 2015 and the process of contacting and compensating affected customers began two years later.
The majority of this money has now been returned to customers. However, the FCA encouraged borrowers who believe they are due compensation to contact the bank directly.
Lloyds did not dispute the FCA’s findings and received a 30pc discount on their fine, which would have totalled £91m otherwise.
Mark Steward, of the FCA, said: “By not sufficiently understanding their customers’ circumstances the banks risked treating unfairly more than a quarter of a million customers in mortgage arrears, over several years. In some cases, customers were treated unfairly, including vulnerable customers.
“Customers should still pay what is owed, but banks are obliged to treat their customers fairly when making new payment arrangements.”
A Lloyds Banking Group spokesman said: “We have since taken significant steps to enhance how we support mortgage customers experiencing financial difficulty, including investing in colleague training and procedures.”
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