Lloyds must pay £500m in refunds

City A.M. Reporter
BRITISH bank Lloyds will take a £500m provision after reaching a deal with the Financial Services Authority which will see it give partial refunds to 300,000 mortgage customers.

Lloyds, the UK’s biggest retail bank, said it had reached a voluntary agreement with the FSA over initiating a customer review and contact programme with regard to concerns over some of its retail mortgage contracts.

Lloyds added that the agreement with the FSA related to mortgage customers of its Halifax unit, where the wording in certain mortgage offer documents had the potential to cause confusion.

Lloyds’ Halifax division said it would write to around 600,000 customers from April onwards to clear up the confusion and would make goodwill payments to around 300,000 of those customers.

Lloyds acquired the Halifax business following its purchase of rival HBOS during the height of the credit crisis in 2008.

The HBOS takeover, which was brokered by the then Labour government, saddled Lloyds with billions of pounds of losses and led the British government to step in and bail it out with taxpayers’ money.

As a result of the bailout, the British government ended up with a stake of around 41 per cent in Lloyds.

Lloyds shares closed down 2.05 per cent yesterday at 67.88, making it one of the biggest fallers on the London Stock Exchange.