Co-op Bank fined £113,300 for putting off PPI claims
The bank put on hold "a significant proportion" of 1,629 complaints in the first half of 2011 to wait for the outcome of the British Bankers' Association's (BBA) High Court challenge of FSA measures designed to ensure all PPI complainants are treated fairly.
Co-op put the complaints on hold despite the FSA making it clear in a letter to the industry in 2011 that claims should be processed normally while the case was ongoing. The BBA's challenge was lost in April of the same year.
Tracey McDermott, the FSA's director of enforcement and financial crime, says: "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 taken if this was not done.
"While nobody suffered any financial loss, Co-op's actions meant that a significant number of people had the resolution of their valid complains delayed for no good reason."
An FSA review of the complaints Co-op put on hold said 100% of the complaints could have been processed.
Between January 2011 and last October banks have paid out £7.5 billion in compensation to customers mis-sold PPI, with the figure expected to rise.
A spokesperson for Co-op says: "Our strong reputation within the banking sector has been built upon doing the thing by our customers but in this instance our procedures have fallen short of the high standards rightly expected of us."
Payment protection insurance is designed to cover you should you fall ill, have an accident or lose your job and can’t make repayments on loans or credit cards. However, research by consumer watchdogs found the cover to be overpriced, filled with exclusions (policies exclude self-employment, contract employees and pre-existing medical conditions) and were often mis-sold because the exclusions were never fully explained. In May 2011, the High Court ruled banks had knowingly mis-sold PPI and ordered them to compensate around two million consumers.
The Financial Services Authority is an independent non-governmental body, given a wide range of rule-making, investigatory and enforcement powers in order to meet its four statutory objectives: market confidence (maintaining confidence in the UK financial system), financial stability, consumer protection and the reduction of financial crime. The FSA receives no government funding and is funded entirely by the firms it regulates, but is accountable to the Treasury and, ultimately, parliament.