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There are many questions circulating about the recent mis-selling scandal at Lloyds Investments after recent announcements that the banking group has been fined £28 million for the pressure they placed on employees to sell products in order to receive bonuses and avoid demotion. The Financial Conduct Authority investigated incentive and bonus schemes at 22 banks throughout the country, and found that Lloyds was guilty of the most serious failings, leading to the massive fine. This has led many investors to question how this investigation affects them.

FAQ’s on Lloyds Mis-Selling

What Exactly Was Discovered?

According to the agency, points were awarded to employees for each investment sold, and bonuses were based on those points. In addition, an advisor who did not meet at least 90 per cent of their goal in a nine-month period could face demotion and a salary reduction from £33,706 to as low as £18,189. In one case, a staff member sold insurance policies to himself, his wife and a colleague to prevent demotion, as insurance sales earned higher points than investment sales.

What Happened if They Failed to Meet Goals?

Lloyds operated a six-tier pay scale, starting at £18,200 to £72,600, and moved staff up or down that scale based on whether they reached their points goals. According to the investigation, a mid-ranking adviser was required to meet 138 per cent of their points goal to qualify for promotions, and those who did not meet at least 90 per cent were demoted with a salary cut. In 2011, the agency found that 14 per cent of the staff was demoted one rank, which led to a 23 per cent cut in salary, while only 10 per cent rose in rank.

Was it Only Demotions That Instigated the Fine?

Staff were also promised bonuses, and one of the more glaring schemes discovered by the FCA were two conducted at the end of 2010. The Christmas Cracker competition offered staff a Christmas hamper or wine selection if they sold 50 products in the last three months of 2010. During September 2010, the Grand in the Hand competition gave advisers £1,000 if customers who they had sold products to previously remained with the bank. The bonuses were an effort by Lloyds to double the bank’s customer base by 2015.

Who Suffered Under the Bonus Plan?

Anyone who purchased an investment from Lloyds TSB, Halifax or Bank of Scotland between 1 January 2010 and 31 March 2012 may have been sold unsuitable products, and there are estimates that more than 700,000 people could be affected. Although not all the sales during that period were unsuitable, approximately 54 per cent were, and the FCA estimates that about 14 per cent may have been outright bad sales.

Am I Eligible for Compensation?

It is unclear at this time which customers may receive compensation in the scandal. For those who have not suffered economic damage, such as those who profited on an investment or claimed payment on an insurance policy, are unlikely to receive compensation. However, the FCA says that, due to the volatility of the stock market, customer detriment from unsuitable sales during the period in question could increase over the next few years. Lloyds anticipates spending as much as £200 million to settle the fine and compensate those who suffered damages.

Is Lloyds Still Pressuring Staff?

Although Lloyds says it has changed their selling practices, employees still say that they are being pressured to sell. In addition, packaged accounts and some other investment products were not included in the recent investigation, so the bank may still use bonuses and incentives as pressure on staff. Other banks also use incentive schemes to promote sales, and they may also come under the scrutiny of the FCA in years to come.

Lloyds will contact customers over the next several months, and some of those customers may be part of what is now TSB. However, the bank says that customers who wish to have their policy reviewed can contact them at 0845 300 0000. Halifax customers may call 08457 20 30 40, while Bank of Scotland customers may call 08457 21 31 41. To reach TSB, call 08459 758758.

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Whether or not you have already surrendered the policy or whether or not you believe there is a problem with them.

Although ours is a relatively new company, our team has many years of experience and success in knowing how to win the best compensation for you.

Maple Leaf Financial will review your investment product and we will be happy to discuss your individual concerns and requirements : 0800 7747624

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Tim Capper reports on Financial Mis-Selling for Maple Leaf Financial. Our aim is to ensure you get honest advice and proper guidance to ensure a suitable recommendation can be made to pursue a financial claim

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Tim Capper

Bringing you financial news and information in plain english for Maple Leaf Financial. My aim is to help readers understand these often complex financial instruments.