British bank Lloyds will take a £500m sterling provision after reaching a deal with the Financial Services Authority to handle complaints over some of its mortgages.
Lloyds, the UK's biggest retail bank, said it had reached a voluntary agreement with the FSA over initiating a customer review and contact programme with regard to concerns over some of its retail mortgage contracts.
Lloyds added that the agreement with the FSA related to mortgage customers of its Halifax unit, where the wording in certain mortgage offer documents had the potential to cause confusion.
The group's Halifax division said it would write to around 600,000 customers from April onwards to clear up the confusion and would make goodwill payments to around 300,000 of those customers.
Lloyds acquired the Halifax business following its purchase of rival HBOS during the height of the credit crisis in 2008.
The HBOS takeover, which was brokered by the UK government, saddled Lloyds with billions of pounds of losses and led the British government to step in and bail it out with taxpayers' money. As a result of the bailout, the British government ended up with a stake of around 41% in Lloyds.
RBS and Lloyds report full-year results later this week, and both banks' earnings are expected to be hit by their exposure to Ireland's economic problems and by bad debt charges. RBS owns Ulster Bank here, while Lloyds owns Bank of Scotland (Ireland).
