Lloyds TSB fined £1.9 million for mis-selling
25 September 2003
The Financial Services Authority (FSA) watchdog has fined Lloyds TSB £1.9 million for mis-selling bonds.
The high street bank mis-sold over 51,000 policies of 'precipice' bonds designed by Scottish Widows. The FSA said that the bank's customers had been sold unsuitable investments that were linked to the stock market.
Thousands of customers were tempted by bonds that offered an income of up to 10.25%, however many did not realise that the return of their capital was dependent on the performance of 30 stocks. Many of these were technology stocks which have plummeted leaving bond holders with large losses.
Andrew Procter, FSA Director of Enforcement, explained: 'Lloyds TSB did not have in place sufficiently rigorous procedures and controls for considering all the issues surrounding the selling of the Extra Income and Growth Plan.'
The fine is the second largest to be imposed by the FSA and Lloyds TSB have also set aside £300m to cover compensation.
Lloyds TSB is also in the news today as it is being suggested that the bank is considering moving over 1,500 jobs to India to reduce costs.