Lloyds take back £2 million of executive bonuses
Lloyds Banking Group is expected to claw back £2 million in bonuses from 10 executives including former chief executive Eric Daniels.
A report from the BBC said the executives, which include four board directors, will be required to repay the cash for their role in the bank's payment protection insurance (PPI) mis-selling scandal.
BBC business editor Robert Peston said that Daniels is expected to lose as much as half of his £1.45 million bonus, while three other board directors are expected to see about £250,000 clawed back.
About six other executives, below board level, would lose around £100,000 each, he reported.
Poor financial performance
This is the first time a British bank has clawed back bonuses from executives, following a financial performance that was worse than expected.
Lloyds has set aside £3.2 billion to cover compensation for those customers who were mis-sold PPI.
The news comes ahead of the bank's results - due on Friday - which are forecast to include a loss of £3.5 billion.
This article was written for our sister website Interactive Investor
Payment protection insurance is designed to cover you should you fall ill, have an accident or lose your job and can’t make repayments on loans or credit cards. However, research by consumer watchdogs found the cover to be overpriced, filled with exclusions (policies exclude self-employment, contract employees and pre-existing medical conditions) and were often mis-sold because the exclusions were never fully explained. In May 2011, the High Court ruled banks had knowingly mis-sold PPI and ordered them to compensate around two million consumers.
The practice of a dishonest salesperson misrepresenting or misleading an investor about the characteristics of a product or service. For example, selling a person with no dependants a whole-of-life policy. There have been notable mis-selling scandals in the past, including endowment policies tied to mortgages, employees persuaded to leave final salary pensions in favour of money purchase pensions (which paid large commissions to salespeople) and payment protection insurance. There is no legal definition of mis-selling; rather the Financial Services Authority (FSA) issues clarifying guidelines and hopes companies comply with them.