Lloyds Bank fined $125M for 'misleading' insurance communication

(Bloomberg) —Lloyds Banking Group Plc’s (LGBI) insurance unit was fined 90.7 million pounds ($125 million) by the U.K. Financial Conduct Authority for failing to make sure the language in millions of home insurance policies was clear. (LGBI is not affiliated with Lloyd’s of London.)

The FCA said the insurance division sent nearly nine million communications between January 2009 and November 2017 telling customers they were getting a competitive price when they renewed their policies. The company didn’t take steps to check that was accurate, the regulator said on July 8.

The firm’s renewal letters “risked serious consumer harm,” Mark Steward, the FCA’s executive director of enforcement and market oversight, said in a statement. ”Firms must ensure their communications with customers are clear, fair and not misleading. LBGI failed to ensure that this was the case,” he added.

According to the FCA, LBGI informed approximately 1.2 million customers in a separate incident that they would receive a discount based on either their ‘loyalty,’ on the fact they were a ‘valued customer,’ or otherwise on a promotional or discretionary basis, where the described discount was not applied and was never intended to apply.

The FCA said it was likely that premiums quoted at renewal would have increased over prior rates and were probably higher than prices offered to new customers or those who switched insurers.

“We’ve written and made payment to those customers affected by the discount issue, and they don’t need to take any further action,” Lloyds said in a statement. “We’re sorry that we got this wrong.”

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• The U.K’s largest insurance companies in 2021

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