UK banks paying out more than £30 billion for an assortment of scandals where mis sold PPI is most prominent appear economically well-to-do. However, BoE figures show senior bank staffers having their bonuses held against them in light of financial scandals.
Lloyds Banking Group’s officials have nearly £900m in bonuses withheld as tougher regulations make every bankers’ step big trouble.
The Bank of England figures showed how UK’s five big lenders revoked £844 million of unvested bonuses since 2011. The new pay code will get 60 per cent of a bankers’ annual bonus and hold it for the next seven years or until he earns a ‘malus’ if they are involved in misconduct. ‘Clawbacks’, which the regulations now allow, will force bankers to return bonuses despite being already-paid.
Lloyds’ PPI Troubles Continue
Mis sold PPI, the UK’s biggest financial scandal, had seen Lloyds claw back more than £2 million from their executives. However, earlier this year they released tranches of deferred bonus awards for 2012 and 2013.
Trouble has not stopped for the lender this year as the FCA imposed a £117 million fine for mishandling PPI claims. It had earmarked additional £1 million compensation packages every quarter for payment protection insurance.
However, the biggest mis seller of PPI is on its way back to private investors after public funds rescued the bank from collapsing during the 2008 financial crisis. Despite the scandal, investors remain hopeful for Lloyds and it share values have immensely increased.
The new regulations guarantee bankers will adhere to proper sales conduct, guaranteeing the satisfaction of the consumer to avoid another possible large financial scandal such as payment protection insurance.
PPI or payment protection insurance allowed holders to repay their loans, mortgages or credit cards for a year should they get sick, have an accident or unemployed. However, plenty were mis sold the insurance policy through unscrupulous sales tactics, costing the entire financial industry £27 billion and counting for compensation.