Lloyds to claw back bonuses in wake of PPI scandal Lloyds Banking Group is expected to take back a significant chunk of the bonuses previously awarded to senior executives as it takes action against the mis-selling of a controversial type of loan insurance. The state-backed bank is set to take the rare step of stripping Eric Daniels, former chief executive, and a number of other current and former directors of a portion of the awards they received in 2010 as punishment for their role in the sale of payment protection insurance (PPI), according to people familiar with the situation. The move is the first example of a bank reclaiming bonuses paid to top staff since the Financial Services Authority introduced new "clawback" rules in 2009. The Daily Telegraph, which first reported the story, suggested that the total amount claimed back could exceed £1m. Lloyds signalled almost a year ago that it would try to recover bonuses paid to the executives responsible for what has turned out to be one of the worst consumer scandals in decades. It followed a decision by António Horta-Osório, who started as chief executive last March, to take a £3.2bn charge - the highest of any of the UK banks - for refunding customers who had been sold PPI. The bank's earnings, due to be released this Friday, are expected to take a large hit from the refunds. PPI was an insurance product commonly sold alongside personal loans and mortgages that would pay out if a borrower was unable to meet their repayments after falling ill or losing their job. It was widely mis-sold by banks who tacked it on to loans without customers wanting or needing it. In total UK banks have set aside more than £6bn in compensation after Lloyds broke ranks with the industry and agreed to refund customers last year. As well as Mr Daniels, its move to claw back bonuses is likely to affect Tim Tookey, finance director, who is leaving the bank at the end of the month. The bank could also take action against Truett Tate, who runs the wholesale business and is also about to step down. Former executives Helen Weir, who ran Lloyds" retail business and was recently appointed finance director of John Lewis, and Carol Sergeant, Lloyds" former head of risk, could also be forced to repay some of their 2010 awards. The FSA has put pressure on banks to claw back part of the deferred bonuses given to those responsible for PPI as it takes a hard line to stop banks rewarding failure. The move by Lloyds is likely to increase the pressure on other banks, including Royal Bank of Scotland and Barclays, to take action against their former executives.