Lloyds Banking Group has been fined £4.3 million by the Financial Services Authority for delaying claims payments for those who were mis-sold payment protection insurance (PPI).

Up to 140,000 customers receiving delayed PPI redress payments from Lloyds TSB Bank, Lloyds TSB Scotland and Bank of Scotland between May 2011 and March 2012.

The Lloyds Banking Group is the second institution to be fined for failing to pay PPI redress payments promptly - on 4 January the Co-operative Bank was fined £113,300 for a similar offence.

The late payments were blamed on "a series of failures" at Lloyds Banking Group, which meant many customers were left waiting for their payments for more than 28 days - the industry standards for PPI redress.

Around 87,000 customers had to wait more than 45 days, 56,000 more than 60 days, 29,000 more than 90 days and 8,800 more than six months.

Another 24,589 payments inadvertently dropped out of the process and banks had to take action to ensure the payments were made. The payments were identified as a result of customers calling to chase payment and media attention.

Even when customers phoned to find out where their redress payments were, the holes in Lloyds Banking Group's processes meant there was no way to fast-track the payment to the customer, tell them when they could expect payment, or even explain why they hadn't received the money already.

The banking group has since completed a comprehensive review of PPI redress payments to ensure that all customers due PPI redress have been paid the correct amount and paid interest at 8% per year on the outstanding redress figure where appropriate.

Tracey McDermott, the FSA's director of enforcement and financial crime, said: "The industry let customers down badly in relation to the sale of PPI. The significant volume of complaints is a product of Lloyds Banking Group's own failings and the least customers can now expect is that redress, when it is due, will be paid promptly.

“In short, (the banking group's) PPI redress payment systems fell well below the standard the FSA expects, and the size of this fine reflects how seriously we view these breaches. All regulated firms must treat those who complain fairly and that includes paying redress promptly when it is due."

UPDATE: 15:57 19 February, 2013

HuffPost UK has received a statement from the Lloyds Banking Group which reads as follows:

"When we took the lead in 2011 to compensate customers on PPI, we had not fully anticipated the volume of complaints to be processed at the outset and experienced some administrative errors as we scaled up our systems and processes.

"We acknowledge that this led to some customers not being compensated on time and we apologise to those customers whose payments were delayed.

"It is important to note that almost all customers who were due redress during the review period have now been paid in full and, as the FSA notes, we have taken steps to ensure customers have not been financially disadvantaged."