Lloyds Banking Group fined for aggressive sales scheme

Lloyds Banking Group has been fined a record £28 million (€33.3 million) by the Financial Conduct Authority (FCA) for its aggressive sales scheme in which advisers would maintain or increase their salaries, and earn bonuses, by selling products customers did not need or want.

In a statement, the UK regulator says the failings affected branches of Lloyds TSB, Bank of Scotland and Halifax, which is part of Bank of Scotland.

This is the largest fine ever imposed by the FCA or its predecessor, the Financial Services Authority, 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,” the regulator says in a statement.

“In one instance an adviser sold protection products to himself, his wife and a colleague to prevent himself from being demoted.”

Its investigation concluded that the incentive schemes were “inadequate” and the control “seriously flawed”. Seven out of ten advisers at Lloyds TSB and three out of ten at Halifax still received their monthly bonus despite the fact that a high proportion of sales were unsuitable or potentially unsuitable.

It also found that 229 advisers at Lloyds TSB received a bonus even when all of their assessed sales were deemed unsuitable or potentially unsuitable; and 30 advisers received a bonus in the same circumstances on more the one occasion.

Lloyds Banking Group, which has agreed to pay the fine and qualified for a 20% discount of what would otherwise have been a fine of £35 million, says in statement that those were historic systems and controls.

It says it has cooperated with the investigation and acted immediately to make significant changes after the issues were identified in 2011.

©2013 funds europe

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