Clydesdale Bank has been fined more than £20m by the Financial Conduct Authority for serious failings in its payment protection insurance complaint handling processes between May 2011 and July 2013.
The £20.6m fine is the largest ever imposed by the FCA for failings relating to PPI.
The regulator found that in mid-2011 Clydesdale implemented “inappropriate” policies which meant that its PPI complaint handlers were not taking into account all relevant documents when deciding how to deal with complaints.
In addition, between May 2012 and June 2013, the bank provided “false information” to the Financial Ombudsman Service in response to requests for evidence of the records it held on PPI policies sold to individual customers.
A team within Clydesdale’s PPI complaint handling operation altered certain system print outs (in a small number of cases) to make it look as if they held no relevant documents and deleted all PPI information from a separate print-out listing of the products sold to the customer.
The regulator added that these practices were not known to, or authorised by, the PPI leadership team or more senior management.
Georgina Philippou, acting director of enforcement and market oversight at the FCA, called the failings unacceptable and well below the standards it expects.
She said: “The fact that Clydesdale misled the Financial Ombudsman by providing false information about the information it held is particularly serious and this is reflected in the size of the fine.”
As a result of Clydesdale’s conduct, of the 126,600 PPI complaints decided between May 2011 and July 2013, up to 42,200 may have been rejected unfairly and up to 50,900 upheld complaints may have resulted in inadequate redress for customers.
The FCA stated the bank’s inappropriate policies meant that, for PPI complaints about loans and mortgages which had been repaid more than seven years prior to the date of the complaint, its complaint handlers would not search for any documents on the basis that they fell outside the seven-year document retention period.
This was despite the fact that, in a small percentage of cases, relevant documents had not been destroyed and were still readily available.
When calculating redress for credit card PPI complaints, handlers ignored those credit card statements that Clydesdale held for the period before the year 2000.
The regulator also found complaint handlers were failing to identify cases where the PPI policy sold was unsuitable for the customer, and found deficiencies in the training and monitoring of complaint handlers.
The statement added Clydesdale will be reviewing all PPI complaints handled prior to August 2014 and offering redress to any customers impacted by these failings.
Clydesdale agreed to settle at an early stage of the FCA’s investigation and therefore qualified for at 30 per cent ‘stage one’ discount.
Were it not for this, the financial penalty would have been £29.5m.
peter.walker@ft.com
