Lloyds Banking Group plc (LON:LLOY) has apologised to investors who were mis-sold investment products as “low-risk” that turned out to be complex and performed poorly.
The bank confirmed a report by The Times that it has written to 7,000 customers holding accounts with Lloyds and its investment arm, Scottish Widows, following complaints over the performance of products sold to them.
The lender's trade union, LTU, said it expects combined compensation to reach £82mln for all the mis-sold products.
"We estimate that the total amount of compensation will be £66mln. In addition, Scottish Widows is also paying out £18mln to 3,500 customers who were mis-sold Protected Capital Solution Funds. We expect that further product reviews will see more customers receiving compensation," the union said.
Lloyds did not say whether the bank would be offering compensation but said it would explain the sitation to those affected.
In an emailed statement, the bank said: “We recognise that with some of our historic structured investment products we did not provide a small number of our customers with sufficient information before making their deposits. We apologise for these errors, which fall short of our aim to be the best bank for customers. We are proactively writing to all these customers to explain their options and will ensure that customers do not suffer any financial loss.”
The mis-selling saga centres around the sale of a pair of structured investment products called the Acorn Market Linked Deposit and Protected Capital Solutions Funds. The product was sold by Lloyds TSB between 2008 and 2010.
In a letter cited by the LTU, the Financial Conduct Authority (FCA) said the Acorn product “was in breach of providing fair, clear and not misleading promotions, because it provides the consumer with a misleading impression of the likely return”.
The news deals a fresh blow to Lloyds following its payment protection insurance mis-selling scandal. In March, the company said it had set aside a further £350mln for PPI claims after the FCA announced it was extending its deadline for making new complaints, bringing its total charge to more than £17bn.
Shares fell 1.52% to 68.60p in morning trading.
-- Adds details, statement from Lloyds, share price reaction --