The Information Commissioner's Office (ICO) has launched inquiries into Lloyds Banking Group following revelations that the bank accessed financial data from tens of thousands of its employees' accounts during sensitive pay negotiations.
Aggregated Data Used in Union Presentations
Last year, during discussions with staff unions, Lloyds utilised aggregated information from approximately 30,000 employee bank accounts. The data, which covered salary, spending, and savings, was presented to union representatives in an effort to demonstrate that its lowest-paid staff were in a comparatively better financial position than the wider population in recent years.
Lloyds, which owns Halifax and Bank of Scotland, strongly encourages its 65,000-strong workforce to hold their personal accounts with the group. This policy effectively allowed the bank to access the financial information without seeking individual consent for this specific use.
Potential for Record-Breaking GDPR Fine
The ICO's inquiries could escalate into a full investigation. If the watchdog finds that Lloyds breached UK data protection laws, it holds the power to impose a fine of up to 4% of the bank's annual global turnover.
Given that Lloyds reported total income of £34 billion for 2024, such a penalty could theoretically reach a staggering £1.36 billion. The ICO confirmed the action, stating: "We are aware of this incident and are making inquiries with Lloyds Banking Group."
Union Reaction and Legal Threats
Accord, one of the main staff unions at Lloyds, welcomed the ICO's scrutiny. The union stated it needed an independent assessment to review what took place and to prevent any recurrence.
In a member newsletter, Accord issued a stark warning: "If the ICO finds that LBG breached data privacy rules, Accord will not hesitate to escalate the matter legally." The union emphasised its commitment to holding the employer fully accountable, putting members' interests first.
Accord noted that Lloyds had provided assurances that the information was fully aggregated and that no individual's data was reviewed by negotiators. However, the union insisted that the bank must learn lessons from the incident and the confusion it caused among staff.
The pay negotiations in question ultimately resulted in an agreement for a £1,200 pay rise for lowest-paid staff in both 2026 and 2027, equating to a 7-9% increase over the two-year period. This deal was backed by union members.
A Lloyds Banking Group spokesperson defended the process, saying: "We have worked hard with our unions, using aggregated data and direct colleague input and we are pleased that members of our recognised unions have voted to support our competitive multiyear pay proposal."
The bank reiterated its commitment to "fair and progressive pay that provides certainty and support for all colleagues, and in this case more junior colleagues." The outcome of the ICO's inquiries will be closely watched, as it tests the boundaries of data usage in corporate negotiations.
