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News

Clydesdale Bank fined £20.6 MILLION for doctoring and ignoring PPI evidence to cheat customers out of compensation

Clydesdale Bank has been hit with a record £20.6 million fine for ‘serious failings’ in the way it handled PPI complaints, which could have left thousands of customers out of pocket.

Failings included doctoring evidence, which meant it didn’t have to make compensation payments to eligible customers to whom it had missold payment protection insurance.

Of the 126,000 PPI complaints made to the bank between May 2011 and July 2013, up to 42,200 may have been unfairly rejected, and up to 50,900 customers who had complaints upheld may have been given too little.

The Financial Conduct Authority hit Clydesdale with a fine of £20,678,300 for ‘serious failings in PPI complaint handling’ – the highest ever PPI fine. Clydesdale received a 30 per cent discount because it agreed to settle at an early stage of the investigation – had it not the penalty would have been £29,540,500.

Clydesdale will now review all PPI complaints handled before August last year, and will offer redress to any customers affected. Customers do not need to take any action – Clydesdale will be contacting them directly.

When a Clydesdale customer made a compensation claim for missold PPI, it was up to its complaint handlers to search for any relevant documentation to ascertain whether the customer had a legitimate claim.

However handlers were only searching documents for the seven years prior to the date on which the complaint was made, on the basis that Clydesdale’s policy is to only retain documentation for seven years.

But this was despite of the fact that, in a small percentage of cases, relevant documents had not been destroyed at all and in fact were readily available.

In addition, the bank provided false information to the financial ombudsman between May 2012 and June 2013 when it was asked for evidence about PPI policies sold to its customers.

A team in Clydedale’s PPI complaint unit doctored a small number of print outs to make it look like the bank did not have any documents relevant to a PPI complaint. It also deleted PPI information from a second print out listing all the products sold to the customer.

Clydesdale’s PPI leadership team and its senior management did not know these practices were going on and did not authorise them, the FCA said.

However regarding the decision not to search historical documents beyond seven years, the regulator said it considered that ‘Clydesdale’s senior management appreciated that there was a risk that their actions in approving the policy on loans could result in a breach but failed adequately to mitigate that risk.’

The regulator also found deficiencies in the training and monitoring of complaint handlers.

Georgina Philippou, acting director of enforcement and market oversight at the FCA said: ‘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.

Penalty: The FCA hit Clydesdale with a fine of over £20million over serious failings in PPI complaint handling

Penalty: The FCA hit Clydesdale with a fine of over £20million over serious failings in PPI complaint handling
‘We have been very clear about how firms should treat customers who may have been mis-sold PPI. In ignoring documents it held which were relevant to its customers’ complaints, Clydesdale failed to treat its customers fairly.’
National Australia Bank recently increased its provision to cover PPI complaints by £420 million in anticipation of higher redress costs.

It said in October that total provisions for PPI redress were £806 million, with £291 million having been utilised.

The full cost will not be known until the review of past cases has been completed. It has hired 400 staff to conduct a full review of 180,000 PPI cases, which it expects to take around 18 months.

Where it finds a customer may have had a claim unfairly rejected in the past or has received insufficient redress it will contact them directly to apologise, explain what happened and offer compensation.

Clydesdale’s acting chief executive Debbie Crosbie said: ‘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 Financial Ombudsman Service 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 took immediate steps to stop it, we made the regulator aware and rapidly introduced strict new monitoring procedures to prevent any recurrence.’

The Yorkshire and Clydesdale business, which has about 7,100 UK staff and more than 300 branches, has long been the subject of sale speculation after it racked up hefty losses for NAB through property loans turned sour.

National Australia Bank, which has owned Glasgow-based Clydesdale since 1987 and Yorkshire since 1990, said in October that it was considering a broad range of options for the banks, including a sale through public markets.

In September 2013 Clydesdale was fined £8,904,000 by the FCA after an error was discovered in the way it calculated some of its customers’ mortgage repayments.

Article taken from – This Is Money

Should you be unsure and feel that your claim has not been handled correctly by your lender, contact Creditline Financial on 01733 393399.

Posted by M Carey on 15 Apr 2015

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