What goes around, comes around – or does it?
Published: Thursday, 22 March 2012
Although the scale of the bonus is still eye watering, Lloyds Banking Group has withheld £800,000 of the £1.45 million bonus awarded to former chief executive Eric Daniels for his last year in charge. Other senior executives may also see their bonuses affected.
The move comes after the Financial Policy Committee’s recent report querying the UK banks’ ability to withstand knock-on effects from the euro-zone crisis, and a warning that they should cut dividends to shareholders and bonuses to employees accordingly.
Yet Lloyds, which is part-nationalised, claims it is taking the action after incurring a bill of more than £3 billion over the mis-selling of PPI.
Good news, you might think.
But think again.
This so-called bill is not money the bank is physically paying out now to customers like you who were mis-sold insurance products. In fact Lloyds is actually just setting the money aside for the time if and when those claims do roll in.
If the bank does pay the full £3 billion out, it just proves how much mis-selling went on under the nose of the famous black horse.
If it doesn’t, it’s because people who deserve to get their money back have not bothered to claim. In which case, you can expect to see Lloyds’ profits suddenly become rosier as the funds get reincorporated back into the business in years to come – possibly spawning further sky-high bonuses to senior staff too.
What you can do
So let’s take this as another prod to ensure everyone we know checks their old credit card, loan and mortgage policies to see if they are entitled to money back. We’ll all feel much better to have our hard-earned money back in our own pockets rather than in someone else’s already super-inflated bonus pot.