A £20.67m fine imposed on Clydesdale Bank by the FCA over serious failings in its PPI complaint handling process has sparked fresh speculation over the future of its parent National Australia Bank.
The fine, which is the largest ever imposed by the FCA for failings relating to PPI, related to failings in the way in which the Clydesdale handled complaints between May 2011 and July 2013.
This latest fine could make it more difficult for National Australia Bank to achieve what its former chief executive Andrew Thorburn said in 2014, which was to float Yorkshire and Clydesdale Banks and make a clean exit from the UK market.
In March, Glenn McDowall, director of business recovery specialist Global Advisory Group, warned that an 80-page report from the Treasury select committee into loan mis-selling allegations may hinder NAB’s chances of an orderly exit.
According to the FCA, the new fine relates to findings 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.
The FCA also found that, between May 2012 and June 2013, Clydesdale provided allegedly false information to the Financial Ombudsman Service in response to requests for evidence of the records Clydesdale held on PPI policies sold to individual customers.
A team within Clydesdale’s PPI complaint handling operation had altered certain system print-outs to make it look as if Clydesdale held no relevant documents and deleted all PPI information from a separate print out listing the products sold to the customer. These practices were not known to or authorised by Clydesdale’s PPI leadership team or more senior management.
Georgina Philippou, acting director of enforcement and market oversight at the FCA, said: “Clydesdale’s failings were unacceptable and fell well below the standard the FCA expects.”
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.
Clydesdale agreed to settle at an early stage and qualified for at 30 per cent discount on what would have been £29,540,500 penalty.
In 2013, the FCA censured Clydesdale Bank for mis-selling tailored business loans to small businesses. It was also fined that year for a miscalculation on 42,500 mortgage customer accounts.
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Debbit Crosbie is acting chief executive of Yorkshire Bank and Clydesdale Bank, until former Allied Irish Bank boss David Duffy takes on the role of chief executive later this year. His job will be to prepare Yorkshire and Clydesdale for sale, probably through an IPO.
Ms Crosbie said: “We deeply regret any instance which led to Fos receiving incorrect or incomplete information from us. These practices were not authorised or condoned by the banks. As soon as this issue was discovered, we took immediate steps to stop it; we made the regulator aware and rapidly introduced strict new monitoring procedures to prevent any recurrence.”
