Lloyds fined £64 million for overcharging mortgage customers

11 June 2020

Lenders fined for mistreating homeowners in arrears between 2011 and 2015


The Financial Conduct Authority (FCA) has fined Lloyds Bank £64 million for failures in mortgage arrears handling dating back to 2011.

The FCA says the bank and its subsidiaries, Bank of Scotland and The Mortgage Business, failed to treat customers fairly who were in financial difficulty and arrears. This led to many of them being put on repayment plans they could not afford.

The fine relates to the way mortgage customers in arrears were treated between 2011 and 2015.

The banks estimate they will end up paying approximately £300 million in redress to the 526,000 customers affected.

Mark Steward, executive director of enforcement and market oversight at the FCA, says: “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."

What happened?

Between April 2011 and December 2015, the way the lenders gathered information from mortgage customers in payment difficulties or arrears resulted in them being treated unfairly.

The banks also used a system where customers had to accept a minimum payment arrangement without considering their individual circumstances. 

The FCA says this created inflexibility and as a result staff failed to negotiate appropriate payment arrangements for customers.

The problem worsened after the bank lost experienced mortgage staff and had to employ people who were new to the role.


The banks began a compensation scheme in July 2017, which includes refunding all fees and interest accrued. Nearly all the customers affected have now been paid.

Any customer who has not been contacted who thinks they may have been affected should contact their bank, the FCA says.

A Lloyds Banking Group spokesperson says: “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.”



The Government is delighted, They've got a lot of money out of the deal, however the poor mortgage holders will have to wait ages to get payouts from wrong doings that started in 2011.
Must be almost as bad as Equitable Life, where I'm told that some policy holders are still awaiting payouts!

Lloyds fined £64 million

Another example of "we are there for you for the journey" !

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