Lloyds Banking Group has been fined £64m by the City regulator over its treatment of more than half a million mortgage customers suffering payment difficulties.
The Financial Conduct Authority (FCA) said Lloyds, along with its Bank of Scotland and The Mortgage Business divisions, did not provide the appropriate level of support to customers in arrears between 2011 and 2015.
Its investigation found the banks failed to help people who were vulnerable through times of difficulties, including marital splits, the death of a spouse or loss of a job.
One case related to the treatment of a customer that had endured a family member going missing.
On top of the fine – the largest imposed by the FCA for mortgage failures – Lloyds has paid £300m in redress to 526,000 customers, the watchdog said.
The hefty penalty comes at a sensitive time for Lloyds which, along with rival banks, have millions of customers struggling to make ends meet amid the coronavirus pandemic and many of them taking repayment holidays on mortgages.
In its statement, the FCA warned all lenders that the hardship faced by customers during the outbreak “only heightens the importance of firms treating customers in financial difficulty fairly and appropriately”.
Lloyds said that all customers affected had already been contacted and reimbursed.
“We have since taken significant steps to enhance how we support mortgage customers experiencing financial difficulty, including investing in colleague training and procedures,” Lloyds said in response.