The FCA has fined Clydesdale Bank £20.6m over serious failings in the way it handled payment protection insurance complaints.
This is the largest ever fine imposed by the FCA for PPI-related failings.
The FCA says 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.
Between May 2012 and June 2013, Clydesdale also provided false information to the Financial Ombudsman Service in response to requests for evidence of the records the bank 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 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.
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. Up to 50,900 upheld complaints may have resulted in inadequate redress for customers.
FCA acting director of enforcement and market oversight Georgina Philippou says: “Clydesdale’s failings were unacceptable and fell well below the standard the FCA expects. The fact that Clydesdale misled the FOS by providing false information about the information it held is particularly serious and this is reflected in the size of the fine.
“We have been very clear about how firms should treat customers who may have been missold PPI. In ignoring documents it held which were relevant to its customers’ complaints, Clydesdale failed to treat its customers fairly.”
Clydesdale’s 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 Clydesdale’s seven-year document retention period.
However, in some cases relevant documents 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 FCA also found that 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.
Clydesdale will review all PPI complaints handled prior to August 2014 and offer redress to any customers impacted by the failings.
Clydesdale agreed to settle at an early stage of the investigation and therefore qualified for at 30 per cent discount. Had it not done so, the FCA would have imposed a fine of £29.5m.
Clydesdale and Yorkshire Banks acting chief executive Debbie Crosbie says: “In 2011 we introduced changes to our policies and procedures that were designed to help us respond to PPI complaints. A number of these changes were inappropriate and have disadvantaged some of our customers. We got this wrong and I am sorry for that.
“We deeply regret any instance which led to the 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 made the regulator aware and rapidly introduced strict new monitoring procedures to prevent any recurrence.”