The Financial Conduct Authority has fined Lloyds Bank £90.7m for misleading its insurance customers.
The watchdog said on Thursday that the bank’s insurance division had failed to ensure that the language in millions of home insurance renewals communications was “clear, fair and not misleading”.
Mark Steward, executive director of Enforcement and Market Oversight at the FCA, said: “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, Lloyds Bank’s insurance segment sent nearly nine million renewal communications to home insurance customers which included language to the effect that they were receiving a “competitive price”. However, the FCA said LBGI did not substantiate the “competitive price” language used by taking steps to check that it was accurate.
Although LBGI rewrote its renewal communications and began to remove “competitive price” wording from 2009 onwards, the watchdog said the language remained in a substantial number of renewals communications despite repeated missed opportunities to address it.
“This caused a risk of harm for the majority of LBGI’s home insurance customers who received these communications, because it was likely that the premium quoted to them at renewal would have increased when compared to their prior premium,” the FCA said.
Renewal premiums offered to customers would also likely have been higher than the those quoted to new customers, or customers who chose to switch insurance provider.
