Lloyds TSB has described its poaching of a broker's customer as a "one-off", after it paid a policyholder's cancellation fee , so the bank could take her business.

Woodbury Insurance Brokers director Tony Scott was furious when he learned the bank had told his customer to cancel a renewal cheque.

"She paid the renewal on her motor policy, then phoned a week later and said the bank had offered her a £20 better deal," he said.

"I said she would have to pay a cancellation charge, so she went back to the bank and it said it would pay it for her.

"It told her that if she wanted she could cancel the cheque she had given me up to 14 days after."

Lloyds TSB's Cheddar branch paid Scott the £62 three-month penalty charge on the £185 policy.

He said that although the bank's method of winning business was not illegal, it was unethical.

"It's not proper insurance broking and I don't think it's fair competition," he said.

"It was the principle."A Lloyds TSB spokeswoman said the bank did not have a policy of paying cancellation charges to gain customers.

"This customer has a very, very good relationship with the local branch and it's a one-off situation where they've taken into account her individual circumstances," the spokeswoman said.

She said the branch made the cancellation payment from its individual budget.

She said it was unlikely that other branches had conducted similar deals with customers, but could not guarantee that no others would arise.