FCA fines Lloyds Banking Group firms a total of £28,038,844 for serious sales incenti

[Legal Beagles]

The Financial Conduct Authority (FCA) has fined Lloyds TSB Bank plc and Bank of Scotland plc, both part of Lloyds Banking Group (LBG), £28,038,844 for serious failings in their controls over sales incentive schemes. The failings affected branches of Lloyds TSB, Bank of Scotland and Halifax (which is part of Bank of Scotland).
This is the largest ever fine imposed by the FCA, or its predecessor the Financial Services Authority (FSA), for retail conduct failings.
The incentive schemes led to a serious risk that sales staff were put under pressure to hit targets to get a bonus or avoid being demoted, rather than focus on what consumers may need or want. In one instance an adviser sold protection products to himself, his wife and a colleague to prevent himself from being demoted.
via FCA fines Lloyds Banking Group firms a total of £28,038,844 for serious sales incentive failings – Financial Conduct Authority.

1. The Final Notice for Lloyds TSB Bank plc and Bank of Scotland plc.lloyds-tsb-bank-and-bank-of-scotland
2. The FCA has fined Lloyds TSB Bank plc £16,407,343 and Bank of Scotland plc £11,631,501, which together is £28,038,844.
3. The Bank of Scotland plc sales referred to in the Final Notice were made in Halifax and Bank of Scotland branches.

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[Amethyst]

Re: FCA fines Lloyds Banking Group firms a total of £28,038,844 for serious sales inc

FINAL NOTICE http://legalbeagles.info/wp-content/...f-scotland.pdf

In September 2003, the Authority fined Lloyds TSB Bank plc £1.9 million for its conduct in selling high income bonds, which also
resulted in it paying over £98 million in redress to customers. The Authority found that sales advisers in the firm’s branch network were put under general pressure to meet targets, and that its failure to implement sufficiently rigorous controls over this contributed to unsuitable sales;

Bank of Scotland plc has recently been the subject of disciplinary action by the Authority on a number of occasions:
(i) in May 2011, the Authority fined the firm £3.5 million in relation to its handling of complaints relating to retail investments;
(ii) in March 2012, the Authority imposed a public censure on the firm in relation to the management and control of its corporate lending;
(iii) in October 2012, the Authority fined the firm £4.2 million in relation to incorrect mortgage terms and conditions that it gave to standard variable rate customers;

In February 2013, the Authority fined Lloyds TSB Bank plc, Lloyds TSB Scotland plc and Bank of Scotland plc £4.3 million for their failure to pay redress promptly to PPI complainants; and

Lloyds Banking Group plc’s provision for compensating customers who were mis-sold PPI was £6.325 billion as at the third quarter of 2013.



The FCA’s investigation focused on advised sales of investment products (such as share ISAs) and protection products (such as critical illness or income protection) between 1 January 2010 and 31 March 2012.

During this period:

Lloyds TSB advisers sold more than 630,000 products to over 399,000 customers, who invested about £1.2bn and paid £71m in protection premiums.
Halifax advisers sold over 380,000 products to more than 239,000 customers, who invested around £888m and paid £38m in protection premiums.
Bank of Scotland advisers sold over 84,000 products to over 54,000 customers, who invested around £170m and paid £9m in protection premiums.

This is awful

Variable base salaries
Advisers could be automatically promoted and get a pay increase or be automatically demoted and have a pay reduction depending on their sales performance. For a Lloyds TSB adviser on a mid-level salary, not hitting 90% of their target over a period of 9 months could see their base annual salary drop from £33,706 to £25,927; and if they were demoted by two levels their base pay would drop to £18,189 – almost a 50 per cent salary cut. In the worst example that the FCA saw, an adviser sold protection products to himself, his wife and a colleague in order to hit his target and prevent himself from being demoted.