If successful, cash will be returned to bondholders and interest payments ceased.

In December last year, the bank publicly declared its intention to redeem the bonds. The bank has asked City watchdog the Prudential Regulation Authority for permission to move forward on their proposed programme, which could take several months.

The exact number of people who will be affected if the move takes place isn’t known – industry estimates suggest 100,000 savers could be impacted while Lloyds claims the number will be far lower. The majority of the bonds were issued years ago by building societies subsequently absorbed by Lloyds. The bonds were originally known as Permanent Interest-Bearing Shares (Pibs) and were popular with elderly savers in need of dependable, continuing income.

In 2009, when Lloyds almost collapsed, the bonds were altered to a different form of investment known technically as an enhanced capital note (ECN). These continued to work in a similar way, with interest being paid regularly. The ECNs could also be bought and sold as before. Today, Lloyds argues that redeeming them will save the bank a significant amount of money in the long-term.

An online petition has been set up to campaign against the redemption programme, and letters of protest have been sent to António Horta Osório, CEO of Lloyds Banking Group, Bank of England Governor Mark Carney and his deputy Andrew Bailey, and Martin Wheatley, head of the Financial Conduct Authority.

Lloyds Banking Group insists it is acting in stakeholders’ best interests, and that the 2009 ECN exchange allowed for early redemption of the bonds.

“Lloyds has treated all investors fairly and on equal terms,” the bank said in a statement issued today. “We have ensured that all communication to retail investors has been clear and transparent and carried out in an appropriate manner,

“Participation in the 2009 exchange was entirely voluntary. The conditions and risks attached were clearly set out. The documentation always highlighted the possibility that these securities could be redeemed ahead of their maturity dates at a price equal to their original face value. This situation has now occurred. The group has made every effort to ensure that it has treated private investors fairly.”

A number of industry commentators have disagreed: Mark Taber, of fixedincomeinvestments.org.uk, believes Lloyds could be breaking the law by breaching its agreement with bondholders. “This is the most outrageous abuse of private investors I have ever seen,” he said. “It cannot be allowed to go unchecked.”