Lloyds Banking Group has received a £28 million fine for pressurising staff into trying to sell customers financial products that may not have wanted or needed.
The Financial Conduct Authority (FCA) doled out the punishment to Lloyds Bank, the Bank of Scotland and the Halifax, which are all owned by the group.
An FCA investigation uncovered ‘serious failings’ in how the banks set sales targets for staff.
Punishments for failing to hit sales targets included missing bonus pay outs or demotion.
The FCA says one salesman sold protection products to his wife and family and even bought them himself to avoid demotion because the stress to meet sales targets within the banks was so great.
Tracey McDermott, the FCA’s director of enforcement and financial crime, said: “The findings do not make pleasant reading. Financial incentive schemes are an important indicator of what management values and a key influence on the culture of the organisation, so they must be designed with the customer at the heart. This is something to which we expect all firms to adhere.
Customer rights
“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.”
“Because there have been numerous warnings to the industry about the importance of managing incentives schemes, and because Lloyds TSB had been fined in 2003 for unsuitable sales of bonds, we have increased the fine by 10%.
“Both Lloyds TSB and Bank of Scotland have made substantial changes, and the reviews of sales and the redress now being made should right many of these wrongs.”
The scale of the operation meant staff sold protection products to 700,000 customers who invested £3.2 billion and paid premiums of £118 million
Warnings about bogus advisers
The FCA has also issued these warnings about bogus firms posing as regulated financial advisers:
Dealing with an unregulated firm
If you buy shares, save money or invest with an unregulated firm, you lose any protection offered by the Financial Ombudsman and the Financial Services Compensation Scheme. Broadly, you have no independent place to complain if the deal goes wrong and are unlikely to win any compensation.
Checking if a firm is regulated
Go to the Financial Services Register to check if a firm is regulated in the UK.
Reporting a suspected bogus adviser
Find out how to report unauthorised advisers on the FCA web site
