FCA fines Lloyds Banking Group £90m for insurance failings

The Financial Conduct Authority has fined Lloyds Banking Group’s insurance division - LBGI - £90.7m for using language in renewal communications deemed to be unclear, unfair and misleading. LBGI comprises Lloyds Bank General Insurance Limited, St Andrew’s Insurance Plc, Lloyds Bank Insurance Services Limited and Halifax General Insurance Services Limited.

Mark Steward, executive director of enforcement and market oversight at the FCA, said: “Firms must ensure their communications with customers are clear, fair and not misleading. LBGI failed to ensure that this was the case. Millions of customers ended up receiving renewal letters that claimed customers were being quoted a competitive price which was unsubstantiated and risked serious consumer harm.

“Between January 2009 and November 2017 LBGI sent nearly 9 million renewal communications to home insurance customers which included language to the effect that they were receiving a ‘competitive price’ at renewal. LBGI did not substantiate the ‘competitive price’ language included in the renewal communications by taking steps to check that it was accurate. Policies were renewed in respect of approximately 87% of renewal communications containing this language.

“Although LBGI rewrote its renewal communications and began to remove ‘competitive price’ wording from 2009 onwards, the language remained in a substantial number of renewals communications throughout the Relevant Period despite repeated missed opportunities to address it.”

The FCA said LBGI had voluntarily made payments of approximately £13.5m to customers who received communications that erroneously referred to the application of a discount when none was applied, and this has been taken into account in the assessment of the financial penalty.

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