The fine follows an investigation by the Financial Conduct Authority, which found that staff were put under so much pressure to seal the deal that some even bought the products to save themselves from being fired or demoted.
The FCA said that incentive schemes created a “culture of mis-selling” between 2010 and 2012 where sales staff across Lloyds, Bank of Scotland and Halifax were put under pressure to hit targets to avoid being demoted, rather than focus on what customers needed or even wanted.
The watchdog’s investigation focused on Lloyds’ sale of investment products, such as share ISAs and income protection products for which staff were offered a “grand in your hand” bonuses for hitting targets.
The FCA said the worst case it had seen was “evidence that one Lloyds staff member sold protection products to himself, his wife and a colleague to prevent himself from being demoted”.
The regulator said competency standards were “seriously flawed” and advisers still received a monthly bonus even though a high proportion of sales was found by Lloyds to be unsuitable or potentially unsuitable.
Tracey McDermott, FCA enforcement director, said: “The findings do not make pleasant reading. Financial incentive schemes are an important indicator of what management values and a key influence on the culture of the organisation, so they must be designed with the consumer at heart.
“The review of incentive scheme that we published last year makes it quite clear that this is something to which we expect all firms to adhere.”
“Customers have a right to expect better from our leading financial institutions and we expect firms to put customers first – but firms will never be able to do this if they incentivise their staff to do the opposite.”
Lloyds today “apologised” for any inconvenience it may have caused and it was revealed that the company settled with the regulator at an early stage and qualified for a 20% discount. Without the discount the total fine would have been £35m, the FCA said.
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