The Co-operative Bank has been fined £113,000 for failing to handle payment protection insurance (PPI) complaints fairly.
The bank had put a ‘significant proportion’ of its 1,629 complaints on hold in 2011 whilst the British Bankers Association’s ultimately unsuccessful High Court challenge to new Financial Services Authority measures was ongoing, the authority said today.
This was despite the FSA making it clear to the industry at the start of 2011 that claims could be progressed normally while the judicial review was in progress.
The FSA’s review of the complaints put on hold found that 100% of the cases 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.’
The BBA’s legal challenge against new complaint-handling measures was dismissed by the High Court in April 2011. The rules were intended to trigger improvements in the way customers were treated when complaining.
Between the new measures being introduced and October 2012, £7.5bn was paid out in redress by financial institutions for mis-sold PPI.