Co-op Bank fined by FSA for PPI complaint delays
THE Co-operative Bank has been fined more than £100,000 by the financial watchdog for failing to handle payment protection insurance (PPI) complaints fairly.
In fining the Manchester-based bank £113,000, the Financial Services Authority said the bank had incorrectly held-off from progressing PPI complaints during a court case brought by the British Bankers Association in 2010, despite being advised not to by the regulator.
The FSA said in a statement: “Co-op put these complaints on hold despite the FSA making it clear in a letter to the industry, dated 21 January 2011, that many claims could be progressed normally while the judicial review was in progress.”
The FSA found that between January 21 2011 and May 9 2011 it was likely that Co-op unfairly put on hold a significant proportion of 1,629 complaints, incorrectly deciding that they could not be determined because the outcome of the judicial review would have a bearing on the final decision.
The regulator’s own review revealed that 100% of the cases examined could have been progressed.
Tracey McDermott, the FSA’s director of enforcement and financial crime, said: “The FSA made it clear that firms must continue to process complaints where possible during the judicial review and we warned that enforcement action could be taken if this was not done. Despite this warning Co-op put in place a policy that was likely to lead to complaints not being dealt with properly during the legal proceedings.
“While nobody suffered any financial loss, Co-op’s actions meant that a significant number of people had the resolution of their valid complaints delayed for no good reason. We will continue to take action where we find PPI customers have not been treated fairly.”
In response, a spokesperson said: “Our strong reputation within the banking sector has been built upon doing the right thing by our customers but in this instance our procedures have fallen short of the high standards rightly expected of us.”
“As the FSA has recognised, no customers have suffered any financial detriment. However, we accept that there was an unnecessary delay created for some of our customers, including the small sample of cases reviewed by the FSA.
“We have co-operated with the FSA throughout their investigation and we are confident that this would not occur again if similar circumstances were to arise.”