Clydesdale Bank fined a record £20m for PPI failings
Clydesdale Bank has been fined more than £20 million by the Financial Conduct Authority (FCA) for "serious failings" in the way it handled complaints about payment protection insurance (PPI).
It is the largest fine ever handed out by the regulator for PPI failings.
The total fine of £20,678,300 relates to PPI complaint handling processes that took place between May 2011 and July 2013, where staff failed to take into account all relevant documents when handling complaints.
But Clydesdale also handed the Financial Ombudsman false information when it requested to see evidence of the records the firm held on PPI policies sold to customers.
The FCA said in a statement: "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."
However, the regulator pointed out that senior management did not authorise these actions.
Georgina Philippou, acting director of enforcement and market oversight at the FCA, added: "Clydesdale's failings were unacceptable and fell well below the standard the FCA expects. The fact that Clydesdale misled the Financial Ombudsman by providing false information about the information it held is particularly serious and this is reflected in the size of the fine."
It said that of the 126,600 PPI complaints that were decided between May 2011 and July 2013, up to 42,200 "may have been rejected unfairly" and up to 50,900 upheld complaints may have resulted in inadequate redress for customers.
Clydesdale said it couldn't locate documents dating back more than seven years, but the regulator uncovered evidence that it did hold these records in many instances. In some cases, the bank ignored older records when determining the size of PPI payouts.
There were also problems with the training and ongoing monitoring of complaints handlers.
The FCA said affected customers do not need to do anything - Clydesdale will contact anyone who has received less in redress than they should have.
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.
If you’ve have a complaint about a financial service product you have bought but the company you bought it from refuses to resolve your problem after eight weeks, the Ombudsman can help. The Ombudsman will investigate and resolve the matter. The Ombudsman is independent and its service is free to consumers. The Ombudsman may find in the company’s favour but consumers don’t have accept its decision and are always free to go to court instead. But if they do accept an Ombudsman’s decision, it is binding both on them and on the business.