Antonio Horta-Osorio, the head of Lloyds Banking Group, is to forego £350,000 in bonuses because of the bank's regulatory fine of £117 million for the mis-selling of loan insurance.

Lloyds Banking Group has reached a settlement with the UK's Financial Conduct Authority totalling £117 million with regard to aspects of its Payment Protection Insurance (PPI) complaint-handling process between March 2012 and May 2013.

The group has apologised for the suffering of affected customers and accepts that part of its complaint-handling process led to a failure to provide fair results for a significant number of customers. Although the FCA has not found that the group "acted deliberately," Lloyds has reviewed all customer complaints fully defended in 2012-13. This review has been completed and more than 90% of customers have received payment and the remainder will be completed by the end of June.

In 2011 the Group was the first to withdraw its support for the industry’s judicial review of the FCA’s policy statement on PPI complaint-handling and, as a result, took the lead in beginning to pay redress to customers complaining that they had been mis-sold PPI. The group made noteworthy efforts to provide redress, with 7,000 people processing complaints. Nearly one-third of complaints were found upon investigation to have had no PPI policy with the group. At its peak in 2012, up to 60,000 complaints were received per week. Lloyds paid redress to around 63% of customers who had a PPI product and who complained, but it made mistakes during this period. It ordered its complaint-handlers to assume that its PPI sales processes were compliant unless they were notified to the contrary. A group press release states: "We did not do enough to tell complaint-handlers where they should not rely on this assumption."

The result was a reprimand from the FCA. António Horta-Osório, the group's chief executive, said: “We made mistakes in our handling of some PPI complaints. I am very sorry for this. We remain fully committed to...ensuring we do the right thing.”

On 27 February 2015, the main board of Lloyds decided to freeze the release of shares in respect of deferred bonus awards from 2012 and 2013 for all members of the group executive committee and for some other senior executives until the conclusion of the investigation. Now that it has reached a settlement with the FCA, the main board has decided to make adjustments to payments due to the group executive committee and for some other senior executives in recognition of their ultimate responsibility for the PPI disaster. In other words, unvested bonuses totalling approximately £2.65 million in aggregate will be forfeited, subject to the process of individual representation.

In addition, the group's remuneration committee has decided to make a reduction of around £30 million to the group bonus pool in respect of the fine.