LLOYDS Banking Group has paid out £13.6million to 350,000 customers following an investigation into home insurance renewal policies.
The Financial Conduct Authority looked into the way the bank was communicating its home insurance renewal policies to customers between 2009 to 2017.
The investigation affected Halifax, and Bank of Scotland too, which fall under the Lloyds Banking Group company.
The financial watchdog has slapped the bank with a £90million fine after it found that the bank's wording of millions of policies was not clear and misleading.
It found that Lloyds, Halifax, and the Bank of Scotland sent home insurance renewal communications to around 9million customers over an eight year period stating that they were being offered a "competitive price" for their policy renewals.
But the banks had not taken steps to prove these claims were accurate.
The FCA said this caused "serious consumer harm" for the majority of customers receiving these communications, because it was likely that the premium quoted to them at renewal would have been higher than that of their existing policy.
It added that these renewals premiums would also likely have been higher than the premiums quoted to new customers.
Separately, around half a million customers were told they would receive a "loyalty" discount – but this was not applied and was never intended to apply, the watchdog said.
Mark Steward, executive director of enforcement and market oversight at the FCA said: ”Firms must ensure their communications with customers are clear, fair and not misleading.
"LBGI failed to ensure that this was the case. 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.”
A Lloyd's Banking Group spokesperson said: "We’re sorry that we got this wrong.
"We’ve written and made payment to those customers affected by the discount issue and they don’t need to take any further action.
"We thank the FCA for bringing this matter to our attention and since then we’ve made significant improvements to our processes and how we communicate with customers.”
More to follow…
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