Lloyds fat-cats made to pay for mis-selling

Penalised: Eric Daniels
Penalised: Eric Daniels

FAT-cat bankers at Lloyds are being hit in the pocket over their role in the mis-selling of payment protection insurance.

Lloyds Banking Group is taking back bonuses worth £2 million from 10 executives.

They include the former chief executive Eric Daniels who is expected to lose between 40 per cent and 50 per cent (£600,000 to £700,000) of a £1.45 million bonus.

The mis-selling involved the sale of insurance that, in theory, covered repayments if borrowers were unable to continue repayments through illness or unemployment.

But, in many cases those taking out the policies would not have been eligible to claim on them.

Three other board members will have around £250,000 of their bonus taken from them and six other executives will lose around £100,000 each.

It is the first time a British bank has used a claw-back option to take back bonuses from executives, following a financial performance that was worse than expected.

The return of some of the bonuses, which were demanded by regulators after the banking crisis of 2008, are being made after pressure from politicians and the Financial Services Authority.

Lloyds has been forced to set aside £3.2 billion to cover compensation for mis-selling and is expected to announce a £3.5 billion loss on Friday when it publishes its results.

It is the UK’s biggest lender and owns the Halifax, the Bank of Scotland and the Cheltenham and Gloucester.

The current chief executive, Antonio Horta-Osorio, said in January, he would not take a bonus for 2011.