Lloyds Banking Group has been handed a record fine by the Financial Conduct Authority (FCA) for "serious failings" related to a bonus scheme for its sales staff.
The bank will be forced to pay the largest ever fine from a UK regulator – £28 million – after staff were pressurised to hit sales targets. Employees were threatened with having their pay cut or even being demoted if they did not reach their goals.
FCA director Tracey McDermott stated that the body's findings "do not make pleasant reading" for Lloyds and she revealed the fine would have been even higher – at £35 million – had the bank not cooperated fully with the investigation.
"In one instance, an adviser sold protection products to himself, his wife and a colleague to prevent himself from being demoted," the FCA revealed in a statement.
Ms McDermott added that firms in the financial sector are expected to put their customers first, rather than the need to drive profits up higher. The FCA found that over one million products – including individual savings accounts and income protection insurance products – were sold to nearly 700,000 customers between 2010 and 2012.
A "champagne bonus" of 35 per cent of their monthly salary was offered to members of staff if they met sales targets. Similar issues were also uncovered by the FCA at Halifax and Bank of Scotland, with each found to have offered monthly "grand in your hand" bonuses to workers.
The investigation into sales targets also found that 200 Lloyds TSB sales advisers were paid bonuses even though all their sales were unsuitable or potentially unsuitable.
Lloyds Banking Group said in a statement: "The group recognises that its oversight of these particular schemes during the period in question was inadequate and apologises to its customers for the impact that they may have had." It was added by Lloyds that it is "determined to ensure that any customer impacts are dealt with quickly and fully" in the future.
Following the FCA's record fine being given to Lloyds, the share price of the bank was down. By 11:47 GMT, its stocks were 1.24 per cent down compared to the start of the day.
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