Lloyds fined for nine million misleading insurance letters

Lloyds Banking Group's insurance arm has been fined £90m for sending out nine million misleading letters between 2009 and 2017 about home insurance.

The bank claimed in the letters that the renewal quotes being offered were a "competitive price".

But the Financial Conduct Authority (FCA) said Lloyds did not check the accuracy of the claims.

It is one of the largest fines ever handed down to a retail bank by the FCA, which regulates the sector.

"Firms must ensure their communications with customers are clear, fair and not misleading," said Mark Steward of the FCA.

"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."

The FCA accepted that the bank started removing the "competitive price" phrase from 2009 but found that a substantial number of renewals continued to include the wording until 2017.

The regulator said the renewal premiums offered to customers were likely to have been higher than the premium quoted to new customers, or customers that chose to switch insurance provider.

Separately, the FCA found that around 500,000 customers were told they would receive a discount based on "loyalty" for being a "valued customer", but the discount was never applied.

Some 350,000 customers have been receiving payments owing to the error. They are being refunded a collective total of £13.5m, the equivalent of about £40 each.

A Lloyds Banking Group spokesman: "We're sorry that we got this wrong. We've written and made payment to those customers affected by the discount issue and they don't need to take any further action.

"We thank the FCA for bringing this matter to our attention and since then we've made significant improvements to our processes and how we communicate with customers."

The FCA has been cracking down on insurance premiums, having found between 2018 and 2020 that most existing customers would receive a higher quote for the same product than a new one.