LLOYDS TSB

The chief executive of Lloyds TSB, one of the banks being bailed out by a £37bn Government rescue package, promised staff they will receive bonuses this year. Eric Daniels told employees that the historic Government intervention would not restrict the lucrative payouts. He claimed the bank's staff have done a 'terrific job this year' and 'there is no reason why we shouldn't' get bonuses.

When Gordon Brown made the decision to invest billions of taxpayers money to prop up some of Britain's major banks, he promised to end the culture of 'rewards for failure'. He pledged that the directors at the banks which were taking part in the bail-out scheme would not receive cash bonuses this year. However, although Lloyds TSB will receive £5.5bn of taxpayers funds, Mr Daniels said that the move placed 'very, very few restrictions' on the bank's behaviour. He said, "If you think about it, the first restriction was not to pay bonuses. Well Lloyds TSB is in fact going to pay bonuses." (Source: Daily Mail, Oct/08)

Lloyds TSB has become the first bank to win a court case after being sued by a customer for imposing supposedly unfair overdraft penalty charges. District Judge Cooke, at Birmingham County Court, dismissed a claim for £2,545 from Kevin Berwick. Mr Berwick argued Lloyds TSB's charges for having an unauthorised overdraft were illegal contractual penalties but Judge Cooke decided the bank's charges were in fact legitimate fees for servicing an overdrawn account.

As this judgment has come from a district judge, it is not binding on any other court, in the way that a High Court judgment might be. Marc Gander, of the Consumer Action Group, a leading bank charges campaign, said, "We feel the judge has not considered the fact that disguising penalties as a fee for a service is a very common device for circumventing established law. The judge appears not to have looked behind the words on the contractual document." (Source: BBC News, May/07)

Lloyds TSB is taking away a £10 buffer zone which stops customers incurring charges should they slip into the red by just a couple of pounds. Now those who go overdrawn without permisssion for as little as 24 hours will be hit with a £30 charge. Any further transactions they make will incur a further £30 fee or £35 if a cheque or direct debit is bounced. The bank will no longer waive fees for customers going overdrawn for the first time in 12 months.

And in a move that further signals banks' desire to kill off free-banking by stealth, Lloyds announced that customers in its paid-for Platinum and Premier accounts would get preferential treatment. These customers, who pay up to £300 a year for their account, will still be able to use the £10 buffer zone.

The Office of Fair Trading launched an investigation into charges which can be up to £39 when account holders bust their overdraft limit or have a cheque or direct debit bounced. It followed a successful assault on penalty charges on credit cards which resulted in banks being forced to drop their fees from around £25 to £12. The OFT warned banks that they would be expected to do the same thing for charges on current accounts, but they failed to change. (Source: Mail on Sunday, Sep/06)

Lloyds TSB is forcing customers to sign a gagging agreement that means they must keep secret any claims they make relating to goods bought using their credit card. According to the Consumer Credit Act, if you use a credit card to buy goods that are faulty, or if they are stolen, or the company goes bust before delivery, you are entitled to claim a refund from your card provider. However, when Lloyds TSB card holders make a claim they are sent a form that includes a confidentiality clause in the terms and conditions. Refusal to agree to those terms, means the claim will not be accepted.

Mike Naylor at the Consumers' Association says, "I can’t see any reason for this unless it is to prevent people from knowing when claims are rejected or because they don’t want people to know others are making successful claims. It certainly doesn’t smack of clarity at a time when the credit card industry and its practices are under greater scrutiny." One rival bank accused Lloyds of trying to keep customers in the dark about their right to claim.

Lloyds, which recently announced annual profits up 66% at £4.35 billion, almost £12 million a day, has made no secret of its hostility to Section 75 of the Consumer Credit Act, which protects credit card users. It is disputing with the Office of Fair Trading (OFT) whether Section 75 covers goods bought abroad. However, this is not the first time credit card companies have been accused of trying to wriggle out of their legal obligation to refund customers swindled in card transactions by dubious businesses.

The OFT has accused providers of being obstructive in the hope that customers will give up and go away. Yet Lloyds appears to be alone in forcing customers to sign a confidentiality agreement. Yet the bank defends its stance. It says, "All claimants must sign the confidentiality clause, not just those claiming under Section 75. Although we treat every case on an individual basis, it is particularly relevant if we are trying to sort out a claim but can’t get hold of the merchant."

If you do want to claim you must contact the credit card company. Most will expect you to have tried to sort out the problem with the supplier first. However, don’t be put off. Card providers have a legal duty to give a refund to customers who have been swindled in card transactions. Be aware you can only make a claim for goods or services that have cost at least £100 but no more than £30,000. (Source: This is Money)

Lloyds TSB could face a legal challenge over the transfer of sensitive personal information to processing centres in India without a customer's consent. The bank's trade union is examining whether to mount a civil court challenge to the practice and a customer is also considering similar action. Law firm Bindmans, which is handling both cases, argues that laws governing data protection in India are not as stringent as those required in the UK. Under European law, sensitive personal data can only be transferred outside the European Economic Area with the express consent of a customer.

Lloyds TSB union claims that the action is an "important case" which could force the bank to drop its offshoring policy. So far, it has referred its concerns to the Information Commissioner to discover whether Lloyds is living up to its Data Protection Act duties. "If successful, this case could force Lloyds TSB to obtain the written consent of customers before transferring their sensitive personal information abroad," the union said. "Since there is a considerable body of research indicating just how unpopular offshoring is amongst customers, this could force Lloyds TSB into rethinking its whole 'Jobs to India' strategy."

However, Lloyds denied it had breached any EU or UK laws. "Security is of the utmost importance to us," it said. "We are confident that we comply with the Data Protection Act and our customers can be reassured that their personal information is as protected in India as it would be in the UK." Lloyds aims to have 1,500 workers in India by the end of the year. In India, UK banks can cut costs by paying graduates as little as $200 a month to work in administration and answer customer calls. (Source: BBC News)

A disgruntled bank customer changed his account password to "Lloyds is Pants", only for staff to switch it to "No We Are Not". Steve Jetley, of Shrewsbury, used "Lloyds is Pants" for phone and online banking for two years. He came up with the password after blaming Lloyds over a holiday insurance muddle which left him with a £1,200 bill after a skiing accident. But Mr Jetley was angry when he called the Lloyds TSB business centre in Birmingham and discovered it had been changed. He demanded it be re-set to "Lloyds is Rubbish". When told that was inappropriate, he tried "Barclays is Better".

When that was knocked back, he went for "Censorship" but was told it could only be six letters. When he finally suggested "Faeces" he was informed new rules meant the characters had to be numbers, not letters. Lloyds has now confirmed a staff member broke banking rules by changing a customer's password without consent. A spokesman said, "We apologise to Mr Jetley." Mr Jetley said, "I haven't registered a new password yet, I'm still trying to think of one I can get past the censors." (Source: Ananova, Aug/08)