Lloyds Bank pays price for 'champagne bonuses'January 2014
Lloyds, the UK banking group, has been fined £28m ($45.7m, €33.3m) for operating a bonus scheme that put pressure on staff to hit sales targets or risk demotions and pay cuts.
The fine could have been £35m if Lloyds had not settled early, said the Financial Conduct Authority (FCA), which imposed the penalty.
The £28m was the largest fine handed out by the FCA or its predecessor, the Financial Services Authority, for retail conduct failings.
The FCA said the failings affected branches of Lloyds TSB, Bank of Scotland (BoS) and Halifax.
Lloyds TSB was reported to have paid some staff the “champagne bonus” of 35% of monthly salary for achieving targets. BoS and Halifax offered monthly “grand in your hand” payments.
The FCA said one Lloyds TSB adviser sold protection products to himself, his wife and a colleague to avoid demotion, and more than 200 advisers received bonuses for unsuitable or potentially unsuitable sales.
Since the investigation Lloyds and BoS have agreed to review their investment selling and pay compensation in unsuitable sales cases.
Lloyds Banking Group said: “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. We are determined to ensure that any customer impacts are dealt with quickly and fully.”
In Europe six financial institutions have been fined a total of €1.71bn ($2.35bn, £1.44bn) by the EU anti-trust regulators for rigging financial benchmarks.
The biggest fine, of €725.36m was imposed on Deutsche Bank. The other institutions fined were RBS, Citigroup, Société Générale, JPMorgan Chase and the brokerage RP Martin.
In the US a $100m (£61m, €72.6m) penalty was imposed on RBS for illegal transactions with Iran, Sudan, Burma and Cuba. RBS is one of several UK banks that have made settlements with US authorities in recent years over dealings with Iran.
The former UK City minister Lord Myners asked in a television interview: “What was going on in these banks? How was this allowed to happen?”
FBS says that it has committed almost $490m since 2010 to improving its sanctions controls.
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