Lloyds Bank Hit With Biggest UK Watchdog Fine In Two Years

Lloyds Bank was hit with a fine totaling £90 million by the U.K. Financial Conduct Authority (FCA), it’s biggest since 2019 and the second largest in the agency’s history, the Financial Times reported on Thursday (July 8).

The fine was levied against the London-headquartered bank for allegedly misleading home insurance clients between 2009 and 2017, per FT. The FCA indicated that the language in renewal letters sent to some 9 million customers was not clear and made reference to unsubstantiated claims that people were getting competitive rates.

Further, some 500,000 customers also were told that a “loyalty” discount was being applied when in fact no discount was included in the rates, the FCA said per FT. Lloyds has already paid around £13.5 million pounds to customers over the erroneous discount.

Insurers are now mandated to extend renewal prices that are equal or lower to the rates advertised to new customers. The rule takes effect next year and is intended to facilitate the elimination of “price walking,” which is a practice that incrementally inflates customers’ costs to buy insurance.

In 2018 the practice was estimated to cost regular consumers some £900 a year per policy across insurance, mobile, broadband, and other markets, Reuters reported, citing data from Citizens Advice. 

“Millions of customers ended up receiving renewal letters that claimed customers were being quoted a competitive price which was unsubstantiated and risked serious consumer harm,” said Mark Steward, executive director at the FCA, Reuters reported.

The FCA also indicated that 87 percent of clients offered “competitive pricing” from Lloyds renewed their insurance policies.

Earlier this year, Lloyds Bank credit card holders — which include Halifax and the Bank of Scotland — were told they could use Mastercard’s Open Banking Connect. The move gave users the ability to transfer funds and make withdrawals and payments.