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Lloyds Bank posts 6% fall in profits in first quarter

Lloyds Banking Group

Lloyds Banking Group has posted a 6% fall in underlying profits to £2.1 billion for the first quarter of the year, down from £2.2 billion a year earlier.

It hailed a "robust" performance in the first three months of 2016.

It said that, excluding the TSB business, which it sold last year, profits were "stable" on a year earlier.

The lender has escaped the hefty profits hit suffered by its investment banking rivals, with Barclays posting a 25% fall in first-quarter profits on Wednesday.

Lloyds: We're taking responsibility for our PPI errors

Responding to today's record £117 million fine over its handling of PPI complaints, Lloyds Banking Group said that it takes responsibility for its mistakes and is looking to rebuild trust with customers.

We are trying to get it right for our customers and to rebuild trust. But we do not get everything right.

That means when we make mistakes, we will take responsibility for them.

This is what we have done here.

– Lord Blackwell, chairman of Lloyds Banking Group

The group said it has launched a programme to re-review or automatically uphold around 1.2 million PPI complaints.

It has also set aside £710 million to cover any redress due to affected customers, who are being contacted directly.

The group said that following its review, 90% of customers received payment and the remainder will be completed by the end of June.

Failings that led to Lloyds' record £117m fine

The £117 million fine handed out to Lloyds Banking Group today easily breaks the record for PPI penalties - the previous largest sum being a £21 million fine imposed on Clydesdale Bank two months ago.

Lloyds Banking Group has been fined £117 million Credit: PA

The sum is also the largest ever retail banking penalty imposed by the Financial Conduct Authority.

"As a result of Lloyds' misconduct, a significant number of customer complaints were unfairly rejected," the FCA said.

These are the failings that led to the state-backed bank's record fine:

  • Lloyds Banking Group workers rejected customers’ complaints about missold PPI, citing a "robust" sales process, when in fact, Lloyds was aware of "significant" failures in the sales process and mis-selling
  • Some customers whose PPI complaints had been rejected were told that their grievance had been "fully investigated" with "appropriate weight and balanced consideration [given] to all available evidence," when this was not the case
  • When Lloyds assessed a complaint, the customer's account of what had actually happened at the time of the sale was not always considered in a balanced way
  • Poor contact with customers about their complaint meant that some were not given an opportunity to provide evidence needed to reach a fair outcome
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