Lloyds Banking Group has been fined £64m by the financial regulator for its treatment of mortgage customers in difficulty.
The fine relates to a lack of support for mortgage customers in arrears between 2011 and 2015.
The bank knew about some of the problems in 2011 but failed to adequately solve them, the Financial Conduct Authority (FCA) said.
Some 526,000 customers have received a share of £300m in compensation.
Where did Lloyds go wrong?
The FCA said three of the group’s brands – Lloyds Bank, Bank of Scotland and The Mortgage Business – failed to gather enough information about people struggling to make their mortgage repayments.
Call handlers were permitted to accept the offer of a certain proportion of the mortgage bill without referring to a more senior colleague.
This created inflexibility, the FCA said, and the risk that some customers were treated unfairly.
«By not sufficiently understanding their customers’ circumstances the banks risked treating unfairly more than a quarter of a million customers in mortgage arrears, over several years. In some cases, customers were treated unfairly, including vulnerable customers,» said Mark Steward, from the FCA.
The problem was made worse as cuts by the bank meant most call handlers were new to the role, as experienced mortgage collection staff had left.
How have customers been compensated?
The bank began a compensation scheme for affected customers in 2017 and has nearly completed the payments.
This has involved refunding various fees and the interest due on those charges.
«We have contacted all customers who were affected between 2011 and 2015 to apologise and have already reimbursed all who were charged fees at the time,» said a Lloyds Banking Group spokeswoman.
«Customers do not need to take any action. We have since taken significant steps to enhance how we support mortgage customers experiencing financial difficulty, including investing in colleague training and procedures.»
The FCA said the effects of the coronavirus outbreak now put mortgage holders and providers under greater strain which «only heightens the importance of firms treating customers in financial difficulty fairly and appropriately».