NOVICE investors who lost money on a high-risk savings product were yesterday promised compensation totalling £98m from Lloyds TSB.

The bank was also fined £1.9m by the Financial Services Authority (FSA) for the lack of advice over ''precipice'' bonds.

As many as 16,500 investors who had not previously bought an equity-related product put in more than a fifth of their savings.

A further 6,000 invested more than 35 per cent only to see the stock market plunge.

Lloyds TSB admitted it had made mistakes in selling the product to customers unsuitable for such a risky product.

The company said: ''We have conducted a thorough review and now recognise that while the product was appropriate for some investors, we did not provide our staff with sufficiently in-depth training on how much of a customer's available funds should be invested in this particular product."

The fine relates to Lloyds TSB's Extra Income and Growth Plan, sold in branches through its Scottish Widows section between October 2000 and July 2001.

The bond promised a fixed income of 10.25 per cent but the capital return was dependent on the performance of 30 FTSE 100 Index stocks.

The FSA said the product was sold to people with no investment experience and who were unsuitable for staking large sums of money.

Director of enforcement Andrew Procter said: "Firms must ensure that the products they recommend are suitable for an investor's individual circumstances and that any potentially unsuitable sales are identified. The procedure and controls to achieve this need to be especially rigorous where medium or high-risk products are being offered to inexperienced investors."

The FSA said Lloyds TSB did not have sufficiently rigorous procedures for selling the product, and said the bank failed to emphasise the need for investors to have balanced portfolios or to retain sufficient liquid resources.