Lloyds Banking Group is being investigated by the Financial Services Authority (FSA) over commission payments on its retail product sales, according to the Financial Times.
The FT said the FSA's enforcement division is assessing the adequacy of controls over commission payments and other staff rewards on retail products at the banking group.
The investigation is part of a "wider crackdown" on incentive payments and bonus structures it thinks encourage mis-selling of financial products, such as payment protection insurance (PPI).
FSA conduct division head Martin Wheatley announced a review of sales incentive programmes at 22 banks, brokers and insurance companies this morning. Lloyds was among the sample of businesses involved in the review, the FT said.
The review found high risks of mis-selling at 20 of the firms. All 20, the report added, had agreed to change their staff reward programmes.
Lloyds said on Wednesday that it had significantly changed its incentive scheme at the start of the year.
The group told the FT: "Today these schemes reward staff for providing high-quality customer service, assessed by a wide range of metrics. We reward behaviours that are focused on achieving correct customer outcomes and excellent service as well as monitoring sales to ensure that colleagues have met customer needs appropriately.
"We also review our schemes four times a year to ensure they remain relevant and appropriate."
Clarke replacing Balkham
'Deep-dive analysis of client behaviour'
Ways to mitigate April’s increases
The best equity income funds examined