Lloyds Banking Group fined £64m by FCA

The Financial Conduct Authority fined three of the group’s brands – Lloyds Bank, Bank of Scotland and The Mortgage Business – a total of £64.05m for “failures in relation to their handling of mortgage customers in payment difficulties or arrears”.

The FCA said that between April 2011 and December 2015, call handlers did not consistently obtain adequate information to assess customer’s circumstances and affordability. As a result, customers may have been treated unfairly.

The banks’ approach was also deemed to be inflexible, and risks were exacerbated when a “large number” of mortgage collection and recovery jobs were lost as part of a simplification plan. “After which point, nearly all of their mortgage arrears call handlers were new-to-role”, the FCA said.

Lloyds has not disputed the FCA’s findings, and was given a 30% discount as a result. The fine would have otherwise have been £91.50m.

Mark Steward, executive director of enforcement and market oversight at the FCA, said: “Banks are required to treat customers fairly, even when those customers are in financial difficulties or are having trouble meeting their obligations.

“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 spokesperson for Lloyds said: “We have contacted all customers who were affected between 2011 and 2015 to apologise, and have already reimbursed all who were charged fees at the time. Customers do not need to take any action.

“We have since taken significant steps to enhance how we support mortgage customers experiencing financial difficulty.”