"Banks are required to treat customers fairly, even when those customers are in financial difficulties or are having trouble meeting their obligations."
The FCA has fined Lloyds Bank, Bank of Scotland and The Mortgage Business £64,046,800 for failures in relation to their handling of mortgage customers in payment difficulties or arrears.
The FCA’s investigation found that the Group’s processes between 2011 and 2015 did not provide the right level of support to customers in mortgage arrears. This included its approach to discussing options with customers and agreeing an appropriate course of action. In some instances, this resulted in some customers entering into payment agreements that were not suitable for their individual circumstances.
The banks’ systems and procedures for gathering information from mortgage customers in payment difficulties or arrears resulted in the banks’ call handlers not consistently obtaining adequate information to assess customers’ circumstances and affordability, creating a risk that customers were treated unfairly.
In July 2017, Lloyds Banking Group disclosed that it had undertaken a voluntary redress programme and has since reimbursed all 526,000 customers who paid mortgage arrears related fees (plus interest where applicable), although not all of these customers were impacted. The banks have estimated that they will have paid approximately £300 million in redress.
The banks’ agreement to accept the FCA’s findings meant they qualified for a 30% discount. Otherwise, the FCA would have imposed a financial penalty of £91,495,400.
Mark Steward, executive director of enforcement and market oversight at the FCA, said: "Banks are required to treat customers fairly, even when those customers are in financial difficulties or are having trouble meeting their obligations. By not sufficiently understanding their customers’ circumstances the banks risked treating unfairly more than a quarter of a million customers in mortgage arrears, over several years. In some cases, customers were treated unfairly, including vulnerable customers.
"Customers should still pay what is owed, but banks are obliged to treat their customers fairly when making new payment arrangements.
"Firms should take notice of the action we have taken today to ensure that their own treatment of customers meets our expectations."
A Lloyds Banking Group spokesperson commented: “We have contacted all customers who were affected between 2011 and 2015 to apologise and have already reimbursed all who were charged fees at the time. Customers do not need to take any action. We have since taken significant steps to enhance how we support mortgage customers experiencing financial difficulty, including investing in colleague training and procedures.”