Lloyds Bank fined USD180 mn

British regulators recently said they had imposed a fine of about USD180 million on the Lloyds Banking Groupover its handling of customer complaints about a contentious loan insurance product that has cost the industry billions of dollars. As a result, the bank said it would cut its 2015 bonus pool.

The regulator, the Financial Conduct Authority, announced the penalty, which may be its largest-ever retail fine, as part of a settlement with the lender for unfairly treating customers after they complained about the improper sales of payment protection insurance (PPI).

The regulator said the bank had rejected 37 percent of complaints related to 2.3 million policies, even though in some cases the complaints had not been fully investigated and Lloyds had known that its processes were flawed.

The bank said that it would reduce the company’s bonus pool for this year by 30 million pounds, or about USD46 million, and that its senior managers would forfeit GBP2.65 million in bonuses already awarded.

Payment protection insurance has cost British lenders about USD29 billion over the past four yearsas they have seen waves of complaints from consumers over the product. The insurance was sold broadly by banks in Britain to consumers taking out mortgages, applying for credit cards and seeking other loans. More than 45 million policies were sold from 1990 to 2010.