The banks’ agreement to accept the FCA’s findings meant it qualified for a 30% discount.
Without this acceptance the FCA would have imposed a financial penalty of over £91m, one of its biggest ever imposed.
The fine is in addition to the redress made by the banks directly to their customers. The banks have estimated that they will have paid approximately £300m in redress, with their redress programmes nearly complete.
An estimated 526,000 customers will get a share of the £300m in compensation.
Lloyds Bank is the parent bank of pensions giant Scottish Widows.
The FCA said that the fair and appropriate treatment of customers experiencing financial difficulty remained a key focus and the FCA is working to ensure that firms raise their standards in this area.
Mark Steward, executive director of enforcement and market oversight at the FCA, said: “Banks are required to treat customers fairly, even when those customers are in financial difficulties or are having trouble meeting their obligations. By not sufficiently understanding their customers’ circumstances the banks risked treating unfairly more than a quarter of a million customers in mortgage arrears, over several years. In some cases, customers were treated unfairly, including vulnerable customers.
“Customers should still pay what is owed, but banks are obliged to treat their customers fairly when making new payment arrangements.
“Firms should take notice of the action we have taken today to ensure that their own treatment of customers meets our expectations.”
The main failings identified by the FCA occurred between April 2011 and December 2015. The banks’ systems and procedures for gathering information from mortgage customers facing financial difficulties resulted in the banks’ call handlers not consistently obtaining adequate information to assess their circumstances and affordability to make payments. The FCA says this created a risk that customers were unfairly treated.