Member Article

Co-op fined by FSA for PPI complaint handling

The Financial Services Authority (FSA) has fined The Co-operative Bank for failing to handle PPI complaints fairly.

The Co-op put PPI complaints on hold during an unsuccessful High Court challenge by the British Bankers Association during 2011 of new FSA measures on treating such complaints fairly. This was despite clear guidance from the FSA that many claims could be progressed during the court proceedings. The Co-op were fined £113,300.

Between 21 January 2011 and 9 May 2011 the FSA found that it was likely that the Co-op unfairly put on hold a significant proportion of 1,629 complaints. They incorrectly decided that the complaints could not be determined as they may be affected by the outcome of the judicial review case. The FSA reviewed a sample of the delayed complaints and found that 100% of the cases examined 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. We will continue to take action where we find PPI customers have not been treated fairly.”

Solicitor Andrew Swan, Head of the Financial Crime Unit at Short Richardson & Forth LLP commented: “The FSA wrote to the financial services industry in January 2011 to confirm that many claims could be progressed as normal whilst the judicial review case continued. It was simply a reminder of the complaint handling obligations that many firms carry and what was expected of them by the FSA. It seems that the misunderstanding caused delay only, albeit this would be of little comfort to the complainants.”

This was posted in Bdaily's Members' News section by Andrew Swan .