For seven years, we have measured our customers’ satisfaction with the service they receive using our CARE Index. After extensive research and consideration we have decided to move from CARE to a new advocacy programme to help us achieve our vision. We will monitor our progress using a Net Promoter Score, which measures the customers’ likelihood of recommending Lloyds Banking Group to a friend or colleague.

During 2008, we have introduced a number of initiatives aimed at increasing customer advocacy. These include: better and more direct information to branch managers on their teams’ performance; net promoter scores built in to reward and recognition criteria; the mapping of customer experience across a wide range of our activities; quality assurance programmes in telephone banking; and identification of the most critical impacts on customer perception.

Around 2,000 customers are contacted monthly and their view of the bank measured. The percentage of those with the highest scores are set against those with the lowest to give the net promoter score*. Over 2008, the average score increased by 10 points.

In a poll of finance directors across the UK, Lloyds TSB Corporate Banking was voted ‘Bank of the Year’ for the fourth year running at the Real Finance/Confederation of British Industry FDs’ Excellence Awards, in recognition of our quality of service and understanding of our customers’ businesses.

*See chart in Group Kep Performance Indicators - Non-Financial.

We are committed to being a responsible lender. It is in our interest to help customers borrow only those amounts they can afford to repay. We have a responsible lending programme with internal management reporting and accountability. This approach is reflected in our mortgage lending where we have maintained a significant share of net new mortgage lending, whilst continuing to focus on the prime mortgage market with a prudent average loan to value.

Our colleagues are trained to offer the necessary advice and support to help customers manage their borrowing. Over 1,500 customer advisers have been specifically trained over the last year to counsel customers with concerns about their financial circumstances. We actively look at our customers’ account behaviour and proactively contact those that show signs of pressure on their finances. We can then help them to find an appropriate solution through more effective budgeting or rescheduling their borrowing. We have a customer support unit that can deliver more intensive help and we also support independent money advice networks including the Money Advice Trust and Consumer Credit Counselling Service. Payments totalling more than £3.4 million were made in 2008.

We take protecting our customers and their assets extremely seriously and continue to invest in activities to deter, detect and prevent fraud. These include transaction monitoring tools to identify suspicious account activity and procedures to verify customer transactions. We also work to ensure our customers are aware of how to protect themselves including dedicating a section of our website to information on common internet fraud types, an annual fraud awareness campaign, support of industry education initiatives and through our sponsorship of the charity Crimestoppers.

Our share of customers belonging to the lowest income groups is higher than our normal market share, reflecting our commitment to greater financial inclusion. By the end of 2008, nearly 540,000 Cash Accounts have been opened for those customers who prefer a basic bank account or who do not meet our standard account opening criteria but are not undischarged bankrupts. We now also offer an added value account with enhanced customer features for customers prepared to pay a modest fee while retaining the simplicity of a basic bank account.

We have also been at the forefront of developing alternative forms of financial provision and support for those communities where mainstream financial services have traditionally been considered inappropriate or inaccessible. We have one of the largest UK high street networks and, through our partnership with the Post Office, our personal customers can access their banking through more than 12,500 local post offices.

We support community finance initiatives and loan and venture capital funds which offer funding to individuals and businesses in some of the most deprived areas in the UK. Lloyds Banking Group has currently committed £12 million to the community finance sector. Our Public and Community Sector team within Corporate Banking is one of the largest funders of the UK social housing sector with £8 billion committed in 2008.

Lloyds Banking Group welcomes and fully supports the FSA’s initiatives to increase financial capability in the UK. We have seconded a senior executive to develop, launch and manage the financial capability in the workplace project, to deliver the parents’ guide to money initiative and help develop the operational delivery capability within the FSA programmes. These two initiatives have provided educational material and training to over three million adults throughout the UK. Feedback from all parties has been very encouraging and these initiatives are helping to improve financial capability.

Lloyds TSB Bank has nearly 600,000 small business customers. They are an important part of our business and we are committed in supporting them in current economic conditions while seeking opportunities to grow our position in the market. Total lending to small businesses increased by 20 per cent over 2008.

In November 2008, we issued a six-point charter of commitments to small business customers which promises that: future reductions in base rates over 2009 will be passed on in full; there will be no change in price or availability of overdrafts for customers operating within agreed terms; reasonable requests for short term finance will be agreed; overdraft limits or prices will only change if there is a material change in the customer’s risk profile; lending rates will continue to be linked to base rate; and we will provide expert guidance and support for small firms.

A series of 120 advice seminars with Lloyds Banking Group specialists and independent experts, providing practical advice and support will take place around the UK in 2009. These will help forge closer relationships between our business customers and accountants and business support agencies. The Group also extended the opportunity for customers without adequate capital to borrow under the Government’s Small Firms Loans Guarantee Scheme.