The Financial Conduct Authority (FCA) has fined Black Horse, Lloyds Bank and Bank of Scotland (together Lloyds) a total of £117m for failing to treat customers fairly when handling PPI complaints between March 2012 and May 2013.

During this period, Lloyds assessed over 2.3m PPI complaints, and rejected 37% of them.

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The FCA found that in March 2012, Lloyds issued guidance instructing complaint handlers that the overriding principle when assessing complaints was that Lloyds’ PPI sales processes were compliant and robust unless told otherwise and the bank also didn’t notify them of known failings in the PPI sales process.

As a result, some complaint handlers dismissed customer accounts of what happened during the PPI sale or did not fully investigate customer complaints, resulting in a ‘significant’ number of customer complaints being unfairly rejected, according to the FCA.

This resulted in a substantial decline in the proportion of complaints upheld between March 2012 and October 2012, causing the FCA’s predecessor, The Financial Services Authority (FSA) to begin an investigation.

Following this investigation, the FCA said the overriding principle was removed, and Lloyds provided information on PPI sales process failings to complaint handlers.

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The FCA also said: "Lloyds has made significant progress towards the fairer treatment of customers in its general complaint handling operation and has established an extensive remediation programme to re-review or automatically uphold approximately 1.2 million PPI complaints, including those within the relevant period."

The fine could have been even greater, however the banking group agreed to settle at an early stage of the investigation, allowing it to qualify for a 30% discount.

Georgina Philippou, acting director of enforcement and market oversight at the FCA said: "The size of the fine today reflects the fact that so many complaints were mishandled by Lloyds. Customers who had already been treated unfairly once by being mis-sold PPI were treated unfairly a second time and denied the redress they were owed. Lloyds’ conduct was unacceptable."