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Co-op Bank posts £1.3bn loss; reveals £411m redress driven by mortgage failings

The Co-operative Bank has posted a loss of £1.3bn for 2013 and revealed a £411m redress bill including £114m for a raft of mortgage failings.

The Co-op Bank announced last month it planned to raise an additional £400m after discovering “a range of issues” following a past business review.

Its annual results, published today, reveal the catalogue of errors which have led to total redress provisions for the year of £411m.

Of this, £114m relates to failings in the way Co-op Bank administered its mortgage business including potential customer redress of:

  • £29m relating to the processing of initial mortgage payments;
  • £31m relating to mortgage fees;
  • £22m on secured arrears;
  • £19m in arrears charges; and
  • £13m relating to mortgage documentation.

The rest of the Co-op Bank’s redress provision relates to £103m for missold payment protection insurance, £33m for missold interest rate swaps, and £109m for breaching consumer credit rules on when customers are liabile to pay interest.

The amount it has set aside also includes £26.1m over “alleged failings” in referring customers to third parties to buy card protection and identity theft cover, £15m for “conduct issues incurred but not reported”, and £10.9m for other, unspecified conduct failings.

The results also reveal Co-op Bank chief executive Niall Booker, who was appointed to head up the bank in June, was paid a total of £1.7m for 2013, including a salary of £669,000. He will also receive a £1.2m bonus based on the long-term performance of the business. 

Co-op Bank chief executive Niall Booker says: “We appreciate customers and other stakeholders continue to feel angry about how past failings placed the future of the business so seriously at risk. I would like to apologise to them, to thank them for their continued loyalty and to thank colleagues for their commitment during such difficult times.”

Yesterday former City minister Lord Myners quit The Co-op Group board, after his proposed reforms of the company were rejected by the Co-op’s largest independent society, Midcounties.

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