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Lloyds share price: Group to reintroduce paid-for accounts in 2014

Bank said to have made changes to sales incentive scheme

by Farquar McIntosh

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Lloyds share price: Group to reintroduce paid-for accounts in 2014

Lloyds share price: Group to reintroduce paid-for accounts in 2014

Lloyds share price: Group to reintroduce paid-for accounts in 2014

Lloyds share price: Group to reintroduce paid-for accounts in 2014

iNVEZZ.com, Tuesday, December 17: Lloyds Banking Group Plc (LON:LLOY), the UK’s biggest lender, will begin selling paid-for current accounts again, a year after it halted sales of the products due to concerns that they were being miss-sold.

The news comes just days after the bank was fined a record £28 million for “serious failings” in their control over sales incentive schemes (Lloyds share price: Bank fined £28 million for sales failings). However, according to financial website This is Money, the bank has made changes to the scheme.

In today’s London trading, Lloyds shares were down 0.4 percent to 76.30p at 8:02 UTC.

Paid-for accounts

Lloyds said it will reintroduce a slimmed-down range of paid -for accounts in the New Year. The Guardian yesterday quoted a spokesman for the group who said that it wanted to move to a "single, consistent sales process, and align ourselves with the rest of the group and the industry".

Paid-for current accounts charge customers a monthly fee for additional services such as travel insurance. Lloyds had four paid-for current accounts, ranging from £9.95-a-month “Silver” accounts to “Premier” which cost £25 a month, before discontinuing them in December 2012. Lloyds and Bank of Scotland are planning to start selling the “Silver” and “Platinum” accounts, but not “Gold” and “Premier”.

Lower reward

Paid-for current accounts were among the products in Lloyds’ controversial point-based incentive scheme, which earlier this month prompted the Financial Conduct Authority (FCA) to impose a £28 million fine on the bank. Last week The Times cited internal documents detailing the scheme, which showed that sales staff were rewarded 170 and 235 sales points for convincing a customer to open a paid-for current account (Lloyds share price: Bank’s controversial sales incentive scheme exposed). Meanwhile, sales of other products could earn as few as 10 sales points. The stark difference pushed sales employees into promoting premium products such as paid-for accounts to customers, as they had to hit quarterly sales targets, based on their salary, or face demotion.

But it appears that Lloyds may have taken steps to address this issue. According to an unnamed “Lloyds branch worker” cited by This is Money yesterday, paid-for accounts will have a significantly lower reward of 55 points attached to them when they return next year.

In a statement related to the fine imposed on the bank last week, the FCA’s director of enforcement and financial crime Tracey McDermott acknowledged that the bank has made “substantial changes, and the reviews of sales and the redress now being made should right many of these wrongs".

As of 9:11 UTC buy Lloyds shares at 76.50p

As of 9:11 UTC sell Lloyds shares at 76.46p

Trade stocks with Hargreaves Lansdown from £5.95 per deal.

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