Lloyds Banking Group has announced that it will claw back bonuses paid to a number of its senior employees, including former chief executive Eric Daniels, in the wake of widespread mis-selling of payment protection insurance (PPI).
Which? has welcomed the move, having written to the the chairs of the remuneration committees, ahead of the bonus round, and asked them to investigate the awards given to senior executives and to claw back bonuses from those who presided over PPI mis-selling.
Reductions of bonuses for PPI mis-selling
In a statement, Lloyds announced that bonuses paid in 2010 to senior employees, including five executive directors, would be dramatically reduced. Chief executive Eric Daniels will have his bonus reduced by 40%, from £1.45m to £870,000, while four other directors will have their bonuses reduced by 25%.
Lloyds stated that the total number of people affected by its decision is 13, with an estimated £2m being clawed back.
Which? wants more banks to claw back bonuses after PPI scandal
Since 1998, Which? repeatedly warned banks about PPI mis-selling and the failure of executives to heed these warnings has eroded consumer trust and resulted in big losses for banks.
Which? now calls on the other four major banks, (RBS, Barclays, Santander and HSBC) to claw back bonuses for those in charge during the mis-selling scandal.
If unfair treatment or regulatory breaches result in liabilities for shareholders then bonuses must be clawed back from senior executives. If this doesn’t happen, Which? believes the banks will be in breach of the FSA’s remuneration code, which requires clawback of bonuses when there has been a ‘material failure of risk management’.
Watchdog not Lapdog campaign for a stronger regulator
The PPI mis-selling scandal is another example of why Which? wants a new, stronger regulator and has launched its Watchdog not Lapdog campaign.
The new Financial Conduct Authority (FCA), which will replace the Financial Services Authority (FSA) next year, needs to be a watchdog not a lapdog and take a tough, preventative approach, to stop commission driven sales. They are unpopular with consumers, are one of the root causes of mis-selling and create a conflict of interest between the consumer and the firm.
- Reclaim PPI – use our PPI reclaiming tool
- Support our Watchdog not Lapdog campaign – for a stronger regulator
- Call the Which? Money Helpline – if you need help reclaiming PPI